Thursday, October 17, 2013

Walter White aka Heisenberg
Breaking Bad

If you want to Invest Like A Farmer, it is important to know when to plant and when to harvest. So when is a good time to deploy seed capital? As a general rule of the green thumb, it is a good time to deploy seed capital when monopolies "go on sale" (what Wall Street typically refers to as a sell-off, correction, or adjustment.) Having a grocery list of stocks you'd like to buy handy is helpful; it helps identify in advance these empires that can be had for a discount. 

A great example was found today in a major transportation company that controls significant land routes west of the Mississippi. Remembering one of the fundamental guidelines, mainly that boring is underrated, this proved to be a nice time to buy. By definition, a monopoly is an empire with branding, scale, scope, moats, pricing, and a variety of other advantages over its competitors.

As financial famers, we always want to have reserve seed money and a shopping list available of potential buys at our disposal; a significant return can often be made on a purchase of a distressed monopoly that is then held and has its dividends reinvested. Boring, and potentially very sexy with our goal of securing a compounding rate of return that ultimately goes exponential. The opportunity of a lifetime usually crosses a financial farmer's plow twice a month, be prepared to sow those seeds.