The Stingy News Weekly: 01/01/2023
Happy New Year!
Dividends and buybacks
"the combined yield from both is close to 5%" [Dividends]
The Cheesecake Factory marvel
"Common sense for restaurant success is actually the opposite of everything the Cheesecake Factory does. Minimize labor, minimize ingredients, minimize everything. Restaurants are expensive to maintain and trimming excess helps survivability. The restaurant industry revolves around the thinnest of margins, and the common refrain (which should be familiar to anyone who's ever seen an episode of Kitchen Nightmares) is to simplify everything." [Management]
Take your losses
"Given that the yield curve inverted in 2022, we need to examine what returns look like following an inversion. After digging into the data, I discovered the answer - after an inversion returns tend to be more bell shaped and more negative." [Markets]
"We find that optimal methods involve rebalancing that is neither too frequent, such as monthly or quarterly calendar-based methods, nor too infrequent, such as rebalancing every two years. Implementing an annual rebalancing strategy is optimal for investors who don't participate in tax-loss harvesting or maintain tight tracking to a benchmark portfolio, such as passive funds-of-funds. Most of the efficiency of these rebalancing strategies is generated by harvesting equity risk premium, while allowing reasonable portfolio drifts." [pdf] [Markets]
More important than getting rich
"While there is an overspill of advice regarding the 92-year-old legend's investment strategy, I believe the virtues that he lives by are pieces of his success that are often overlooked." [Buffett]
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