*Repost* Car Wash Psychology, Mental Models, And The Power Of Habit

*Repost* Car Wash Psychology, Mental Models, And The Power Of Habit

Getting back from a 33 hour drive across the country left me exhausted.  But I had one thing left to do before resting.

I had to wash my truck...

From the salty and sticky humidity of South Florida.  Through the rain, snow, and ice of Tennessee and Kentucky.  Then the dry wind of Iowa and South Dakota.  And all the bugs and dirt between.  My truck was a disaster after a 33 hour drive through nine states.

Why did I have to wash my truck when I got home?

Because several weeks before this I'd read a psychology and marketing case study about car washes. And I wanted to see if it was true or not.

Exhausted from the three-day drive across country. I waited at the car wash and marveled at the surprising beautiful March day in Western South Dakota.

Instead of negative wind chills. High wind. And blizzards that are common at that time of year here. I came home to a cloudless sunny sky. And 70 degree temperatures.

It was a perfect day to wash my truck. But after getting it into the car wash bay I worried that I'd made a mistake.

Why?

Because of marketing, psychology, and habit.

But we will get back to this later...

Building Worldly Wisdom and A Latticework of Mental Models

Why am I talking about marketing, psychology, and habit on a value investing blog?

As a contrarian deep value investor, I'm always looking for ways to gain legal advantages over other investors.  Most of the time this involves working hard.  But sometimes it also requires the ability to think well.

To think better I study a lot of topics.  And follow Charlie Munger's teachings about gaining Worldly Wisdom.  And building a latticework of mental models.

One of the areas I've spent a huge amount of time studying is human psychology. Trying to figure out  why we do what we do.  And what makes us tick to become a better investor.

How To Get People To Buy Things

I know a lot about how to analyze businesses for potential investment.  So when I got hired by the investment newsletter I was not only excited to write an investment newsletter.  But I also looked forward to learning about the investment newsletter business.  And everything associated with it including psychology and marketing.

If I wasn't at work.  At the beach.  Sleeping.  Or working at home.  I was reading anything I could about marketing and how to improve my writing.  But for this post I want to talk about some of the things I learned about marketing...

Marketers Rule The World

Did you know that shampoo doesn't have to foam to clean your hair?  What was Listerine used for before marketers got involved?  Did you know that Febreze was a failure until marketers used psychology and habit to market it?  And does your car get cleaner when you upgrade to the "Super Wash."

I will answer these questions below.  And also answer how marketers use psychology to get us to develop habits.  And buy products.

Shampoo

Below is a marketing case study from Procter & Gamble brand Herbal Essences.  Which before marketers revamped it was floundering.  Emphasis is mine.

I also changed some of the wording to shorten things.  For the full transcript go to this link.

When Procter & Gamble acquired hair-care company Clairol in 2001, it inherited a floundering shampoo brand. By 2004, Herbal Essences was in a "long-term decline," reports Chairman and CEO A.G. Lafley.

Marketed to all women the line had gone stale, with little distinction from the many competitors it shared on the drugstore shelf.

By 2006, Lafley and P&G's beauty business chief, Susan Arnold, knew something had to be done with the tired brand.

To find the right new, smaller target market for the brand, Arnold and her team turned to marketers.

There, the team came up with a new target audience for the brand—Generation Y. "In the case of Gen Y, there really wasn't another hair-care brand that was really meeting their needs," says Lafley. "The question was: 'Can Herbal do it?'"

Arnold's team bet yes. They redesigned the packaging of the product to "fit" this more tailored market: The shampoo and conditioner bottles are curved so that they literally fit together on the shelf. The nesting shape not only helped Herbal Essences stand out from others on the shelf but also encouraged more young women to buy both products, driving up conditioner sales.

To appeal to Millennials, the team also updated the language on the packaging. The ho-hum "dandruff" reference gave way to "no flaking away." Names for different hair styles were changed to more youthful phrases such as "totally twisted" or "drama clean." "We totally reframed the proposition," says Lafley.

P&G made Herbal Essences more relaxed and more quirky, all in the language of young women.

Marketers used psychology and habit to turn this floundering line into a billion dollar plus brand.  And Herbal Essences parent Clariol now controls an estimated 39% of the entire hair care market.

For further information on the revival of Herbal Essences look at this infographic.

Oh and to answer the above question...  The chemical sodium lauryl sulfate was added to shampoo to foam and bubble.  It's not necessary in shampoo.  And it doesn't affect how well the shampoo cleans your hair.

Shampoo makers added the foaming agent for marketing and psychology purposes. To help sell product and build habit.

I will explain this more later.

Oh and the foaming ingredient is also what irritates your skin and eyes.  So thank marketers for your dry skin.  And eye pain when washing your hair.

Listerine The Antiseptic

Did you know Listerine was a deodorant and after shave.  A brand of cigarettes.  And used to treat gonorrhea and cuts before becoming a mouth wash?

Below is one of the ads used to promote Listerine after it launched..

But by focusing on cuts, scratches, and gonorrhea Listerine was a failure.

Then marketers got involved.  Made bad breath a terrible thing.  And launched a $317 million brand as of 2013...

Until that time, bad breath was not conventionally considered such a catastrophe. But Listerine changed that. As the advertising scholar James B. Twitchell writes, "Listerine did not make mouthwash as much as it made halitosis." In just seven years, the company's revenues rose from $115,000 to more than $8 million. From Wikipedia

Instead of saying Listerine will help keep your cuts from becoming infected.  Marketers found out that Listerine also helped get rid of bad breath.  And they used the second ad above to illustrate the point.

Listerine marketers made having bad breath a terrible thing.  Up to that point this wasn't awful.

In the second ad above marketers said that if you have bad breath you won't get married.  But if you use Listerine on a regular basis - making it a habit - not only will you get rid of bad breath.  But it will also help you get the guy or girl of your dreams.

So marketers used psychology and habit to help get rid of smelly hair and breath.  What other smells have marketers helped us get rid of?

Febreze The Failure

The below quoted area is from Wikipedia.  Emphasis is mine.

The product, initially marketed as a way to get rid of unpleasant smells, sold poorly until P&G realised that people become accustomed to smells in their own homes, and stop noticing them even when they are overpowering (like the smell of several cats in a single household).

The marketing then switched to linking it to pleasant smells and good cleaning habits instead, which resulted in a massive increase in sales.

Only after the product became well established in the marketplace did the marketing go back to emphasising odor elimination properties as well.

They have advertised it so that people use it for cleaning, and for designing the house air.

Febreze was a failure when it launched.  Even after Procter and Gamble - one of the best product launch companies in the world - spent millions of dollars to promote it.

Febreze didn't become the huge success it is until P&G figured out how to market it to us.  And they've done a great job... Febreze is now a billion dollar plus brand.

For more information on how marketers used psychology and habit to change Febreze from a flop to a billion dollar brand go here.

Now let's get back to the story at the beginning of this post...

Car Wash Psychology

So why was I so eager to get my car washed when I got home from my 33 hour cross-country trip.  And how did marketers make me think I'd made a mistake when selecting my car wash?

A few weeks before my trip I was reading about marketing and psychology to improve my knowledge in those areas.  And came across a case study about the car wash industry.

The case study detailed how car washes get us to upgrade to the higher end washes so they make more money.  But the thing that struck me like a brick was that the different color bubbles in the car wash don't do anything to clean or wax your car.

The colored bubbles only make us think they wash better...

The car washes add colors to the bubbles of the higher end washes to make us think they are doing something.  It's a clever way marketers - in this case the car wash - affects our psychology to get us to upgrade.  But it also builds habits as well.  And habits are what marketers use to get us to buy stuff.

The Power Of Habit

The Power of Habit is an amazing book.  And I agree with Mr. Pink above.

It's changed the way I think about how I parent.  My investment processes.  Psychology.  And how I do everything in my life.  In short I cannot recommend that you read this book enough.

Below is author Charles Duhigg explaining in a three-minute video how we develop habits.  And how to break bad habits.

The Combined Power of Psychology, Marketing, and Habit

So now let's get back to why I worried at the beginning of this story.

After my trip I decided to do a little experiment to see if the car wash case study I read was full of crap.  Or if it was right and car washes were using psychology and habit to get us to upgrade to stuff we didn't need.

When I got to the car wash I picked the basic wash without the colored bubbles to see if the case study was right.  But when I got into the wash I started to worry that I'd wasted my money.

Ever since I was little everyone always told me to upgrade to the "better" car washes.  If I didn't my car wouldn't get clean and I would have to wash my car again.

So even though I knew that the upgraded car washes weren't necessary after reading the case study.  And doing further research to confirm the findings.  As I sat in the car wash bay with the water and soap running over my truck.  I began to worry that I'd wasted my money when I didn't see the colored bubbles washing my truck.

Marketers have incredible power when they combine psychology and habit when selling stuff...

Even though I knew the colored bubbles were a marketing tactic.  I still worried that I was wasting money.

So the longer I sat there the more anxious I got to see if the basic wash worked...

After I got through the air dryer I got out of my truck to see if I wasted my money or not.

With the water still beading off my red Dodge Ram 1500 I saw that the basic wash got all the salt, dirt, bugs, snow and rain water spots off my truck.  And my truck was as clean and shiny as the day I bought it.

Seeing this brought a smile to my face knowing that I learned some powerful lessons about marketing, psychology, and habit.  Built my latticework of mental models and worldly wisdom up.  And got a bit closer to achieving my goals as an investor, teacher, and entrepreneur.

Still smiling knowing I learned something valuable, I drove my clean truck home and slept for the next 16 hours.

And I've shared this story in the hopes that it will help you in some way too.

What quirky mental models, worldly wisdom, or aspects of psychology have you learned that blew your mind when you first saw them?

Please share below in the comments.

***

Want more information on how marketers use psychology to get us to buy stuff...  Go here.  It looks like an entire college level course about marketing and consumer market psychology.

And if you want to read more about Mr. Munger's thoughts on psychology and how to think better, read his speech Psychology of Human Misjudgment.

Or watch the 76 minute talk below from YouTube.

This is the best thing I've ever read about psychology.  And how to become a better thinker.

***

Don't forget, if you want to receive two free gifts that will help you evaluate companies faster.  Get all future blog posts. And be entered to win a hard copy of: The Snowball - Warren Buffett and the Business of Life and a $50 AMEX gift card. Sign up for the Value Investing Journey newsletter here.

*Repost* Warren Buffett And Charlie Munger Are Failures

*Repost* Warren Buffett And Charlie Munger Are Failures

I'm on vacation right now so I'm reposting some of the most popular articles from the blog until I get back on Monday August 3rd.

On Failure Part Two

I wrote a version of this post a few days after leaving my job almost a month ago and planned to keep it private.  But it helped me get over losing my job.  And helped me get over the anger, sadness, depression, fear, and other emotions I felt.  So I've decided to share it with everyone.

Rough times happen to everyone from time to time.  But destructive thoughts if left unchecked can lead to bad things.  I'm sharing this post in the hopes of helping someone else who may be going through their own rough times.

But I'm not the best resource to learn from on failure... Let us learn from a couple masters who both failed before making billions of dollars.  And helping millions of people around the world.

Warren Buffett and Charlie Munger Are Failures

Warren Buffett’s biggest failure is now his biggest triumph.  And he uses this “failure” to help millions of people throughout the world.

One of Charlie Munger’s first major investments failed.  But he used that “failure” to become rich and help the world too.

I have failed.  And I will now use this “failure” to help make the world a better place like Buffett and Munger did.

But before we talk about that we need to talk about three major failures.

Warren Buffett's a Failure

File:Warren Buffett KU Visit.jpg

In the 1950’s and 60’s Warren Buffett started an investment partnership with $100,000 of his own money.  And money he raised from family and friends.

Over time he built the firm by buying portions of smaller companies whose prices were cheap.  He did this so well that soon after starting he was able to buy entire companies instead of just portions of them.

But he soon failed...

Berkshire Hathaway Is a Failure

The original Berkshire Hathaway was a textile company based in New England.  When Buffett took it over no matter what he did the company continued to lose money.  This was because new and cheaper foreign and non union Southern US companies made it impossible for Berkshire to compete on price.  This led to the company losing millions of dollars over the years after Buffett bought it.

As this continued for years Buffett came to realize he was fighting a losing battle.  And instead of continuing to pour money into Berkshire and letting the business fail.  He used this money to buy companies that would make money instead.

He started buying smaller insurance companies.  And used the excess funds from these insurance companies – insurance float – to buy even more profitable and undervalued companies.

In doing this he turned his original $100,000 investment funds into the $357 billion behemoth it is now.  Today Berkshire is one of the biggest companies in the world.  And it owns some of the most valuable companies and brands on Earth.

But by his own admission he wouldn't have done as well without teaming up with another failure.

Charlie Munger Is a Failure

File:Charlie Munger.jpg

Charlie Munger was first a high profile lawyer.  And then a property developer in California before becoming a full time investor in his late 30’s.

His fund did well for years as he built up the companies assets.  And one of his first major investments was in a company called Blue Chip Stamps.

It was a stamp trading company that also produced a lot of float. For example, if you gained 100 stamps you could exchange the stamps for a prize like a vacuum cleaner.

When Munger bought Blue Chip it was growing and producing a lot of excess cash.  At its peak in 1970 Blue Chip generated $126 million in sales.

But Munger recognized a problem a few years after buying Blue Chip.  Sales began to decline fast.  And nothing Munger did stemmed the tide of falling sales

Instead of letting it fail he used the excess funds from Blue Chip - which was still profitable while sales fell - and used these funds to buy other companies.  He eventually bought Wesco which is an insurance/financial company.  And used the float from this business to buy ever bigger stakes in profitable and undervalued companies.

Sound familiar?

By this time Buffett and Munger had met, exchanged ideas on a regular basis, and were friends.  But they still didn't work together.

Munger did such a great job running Blue Chip that Buffett bought Blue Chip and merged it into Berkshire Hathaway and then a change occurred.

The Change of Mindset

Buffett has said when this happened, Munger helped change the way Berkshire invested its growing cash machine.  Instead of concentrating on just cheap companies that weren't great businesses.  They turned their focus to companies that were cheap or fairly valued.  But now concentrated on good to great businesses.

***

Side note on the book Mindset.

I first read the book Mindset after seeing Erik Spoelstra - multi time championship coach of the Miami Heat - recommend it.

It's a phenomenal read.  And while I read this before the problems I had at my job.  The lessons I learned reading Mindset helped me cope with losing my job.

I cannot recommend Mindset enough not only for coping.  But also for teaching lesson on how to get into the proper "championship" mindset.

If these kinds of lessons interest you I also recommend The Obstacle Is The Way.

***

Due to this combination of minds.  The change in mindset.  And the power of compound interest, Berkshire exploded...

But we will get back to that later...

I Failed Too

After overcoming debilitating health issues that lasted for 10 years.  After teaching myself about investing.  Writing my own full length value investing education book.  And then being hired, I failed.

I thought my knowledge about how to analyze a company’s balance sheet and investment potential was all I needed… I was wrong.

I thought I had all the tools necessary to succeed but I didn’t.  Hard work can only get you so far...

Without the proper mindset, and in my case purpose, you will still fail no matter how hard you work.  And I don't mean fail at your job.  I mean you will fail yourself.  Your principles.  And what you are striving to become and build.

Buffett and Munger's Failures Are Now Helping The World

Buffett and Munger grew to become two of the wealthiest, most powerful, and respected people in the world.

Mr. Buffett who has been one of top three most wealthy people in the world for years has gained 98% of his $77 billion net worth after the age of 65.

And will give 99% of this fortune to the the Bill and Melinda Gates Foundation upon his death.

Charlie Munger is worth $1.3 billion.  And has already given hundreds of millions of dollars causes he supports.

Both men not only plan to give billions of dollars to causes they care about.  But the luxury of having all the money they do enables them to also give time to these causes as well.  This is far more important.

While I can't speak for Mr. Buffett and Munger on their motivations.  I can speak for myself...

I wasn't making an impact on anyone else’s lives other than my families.  And I failed myself and what I'm striving to build.  That changes now...

My Purpose is Helping Others

This is what I had to learn by leaving my prior company and coming back to this blog.

Together we can make not only the lives of our families betters.  But those of the rest of the world as well.

This is my purpose…

This blog will no longer be about improving my own knowledge.  It will be about teaching and improving others lives.

I have several projects that I will announce over the coming weeks.  All related to finance and geared towards helping and educating as many people as possible.

While I can't reveal what they are yet since they aren't finished.  I can tell you today that part of all sales from this blog will go towards helping, educating, and feeding kids and adults who need a hand up.

5% - to start - of all sales from this blog.  My book.  And all future unannounced projects will go to charities of my choosing in the Philippines.  And also to local charities in my area.

The percentage given will grow over time as me and my family become more secure financially.  And the scope of the charities will grow as well.  But this will be a great start.

Together we can make a difference in people’s lives.   Do great things.  And improve the world.

Mr. Buffett and Mr. Munger are going to help tens of millions of people with the money and time they're contributing.

How many people can a blog and like minded people help?

Let's find out in the coming years.

Are there any books, articles, sayings, or lessons that you've learned that have helped you when you've failed in the past?

If so please share with everyone below so we all can learn.

***

To gain access to a free 20-page gift that will help you evaluate companies faster.  And is something I use every time I research a company.  And to make sure you get all future posted content. Go to this link.

Vacation

Vacation

No not the terrible looking remake of a classic movie that's about to come out.

Or even the classic movie itself.

Christmas Vacation is my favorite vacation movie by the way.

I'm on vacation.  And that's why I haven't posted since Monday this week.

I just got access to a computer with a keyboard and wanted to let you know why I haven't been posting.  But to make up for this next week I'm going to be reposting some of the most popular articles from the past.

I'll be back from visiting family in Boise Idaho with some new posts on Monday August 3rd.

P.S. Feel free to keep emailing me as well.  I probably won't email you back until I get back home.  But I will email you when I do have time again.

One Day Until Next Press On Research Issue

One Day Until Next Press On Research Issue

Tomorrow I'll release the next Press On Research monthly issue.  And below is an unfinished excerpt from the 27 page issue.

The Biggest Investment Secret In The World

How Warren Buffett Got So Rich And How You Can Too

Warren Buffett’s admired around the world for his philanthropy as he’s going to donate 99% of his $70 billion plus net worth to charity when he dies.

He can donate so much money because of how great an investor he is.  But almost no one knows how Warren Buffett made his fortune.

Yes, most investors know about his investments in Coke (K), Johnson & Johnson (JNJ), and Wells Fargo (WFC).  But this isn’t how he built his fortune.

Investor’s who’ve studied Buffet know he built his partnership, and then Berkshire Hathaway, buying small companies.

But this still isn’t the true secret to Warren Buffett’s success.

Today I’m going to tell you how he grew $100,000 into more than $70 billion.  And tell you how we can start doing the same.

But before we explain the exact companies Buffett built his fortune on.  We need to talk about why Press On Research concentrates on small caps.

A University of Kansas student asked Buffett about this in 2005:

“Question: According to a business week report published in 1999, you were quoted as saying: “It's a huge structural advantage not to have a lot of money. I think I could make you 50% a year on $1 million. No, I know I could. I guarantee that.”…would you say the same thing today?” 

Here’s Buffett’s answer:

“Yes, I would still say the same thing today. In fact, we are still earning those types of returns on some of our smaller investments. The best decade was the 1950s; I was earning 50% plus returns with small amounts of capital. I could do the same thing today with smaller amounts. It would perhaps even be easier to make that much money in today's environment because information is easier to access.

Yes, I’ve said this before many times.  But it’s an important concept to understand.

Small ultra safe investments that produce a ton of cash.  Have little to no debt.  Pay dividends and buy back shares.  And are cheap are my favorite investments.

These kinds of businesses are what Value Investing Journey and Press On Research is all about.

Today’s recommendation has no debt.  Owns more cash, cash equivalents, and short-term debt equivalents than its entire market cap.

And just its net cash, cash equivalents, and short-term debt equivalents make up 77% of its market cap.

This doesn’t count any of its property, plant, and equipment, future premiums earned, or cost-free float.  And this company is undervalued by 29% to 70%.

But this still isn’t all…  It’s also much more profitable than competition.

Today’s pick isn’t just a great company with all the above traits.  It’s also in Buffett’s favorite industry to invest.

Investing In Insurance

Most people won’t research insurance companies.  I wouldn’t early in my investing journey.  And many professional analysts stay away too.

This is because insurance companies are hard to understand at first.  Have new and confusing terminology to learn.  And normal profit metrics don’t matter much for them.

But if you learn how to evaluate them not only will you learn they’re easy to evaluate once you know what you’re doing.  But you can use the same repeatable process on every insurance company.

And Buffett has continued to buy into insurance – his favorite industry – constantly over the decades.  And it’s why he’s so successful.

In reality insurance companies are easy to understand.

Insurance companies take money – premiums, the insurance version of revenue – as payment for insuring things like businesses, equipment, health, life, etc.

The insurance company doesn’t have to pay you a dime of the money it earns over the years.  Until there’s some kind of damage or theft of whatever’s insured.  When this happens they pay the agreed upon insurance rate out to the policyholder.

While the company continues to earn money – premiums again - it invests some of it so it can pay back your policy in the future.  And also make a profit in excess of the amount earned, invested, and paid out.

If the company writes its policies and invests well over time it will earn underwriting profits.  And grow the assets it can use to write more policies and invest more money.

If it doesn’t, the company will go out of business when a major disaster strikes.

Think of insurance companies like investment management companies.  But instead of only earning management fees.  Insurance companies earn premiums on top of investment earnings.  These effects can double profits over time…  If management is great at what they do.

The insurance business while easy to understand is one of the hardest businesses to be great at.

Other than being a low-cost operator like GEICO.  Owned by Berkshire Hathaway.  There are no competitive advantages in this industry.  And it also experiences wild swings of huge profitability than massive losses.

But if the company writes policies and invests money well over a long period they can grow to great sizes at almost no extra costs.  The only new costs may be to hire more staff.

Insurance companies also hold the greatest secret in the investment world…  Float.  This is how Buffett built his fortune.  And how we’ll start to build ours.

But before we get to this we need to know why float is so important.

Brief Berkshire Hathaway History

Buffett began buying Berkshire Hathaway stock in 1962 when it was still a textile manufacturer.  And when he still ran his investment partnership.

He bought Berkshire stock because it was cheap compared to the assets it had.  Even though the company was losing money.

He continued to pour millions of dollars into Berkshire to keep up with foreign and non union competition.  But none of this worked.

In time Buffett realized he was never going to make a profit again in the textile industry.  So whatever excess funds Berkshire did produce he started buying other companies.

The first insurance company Berkshire Hathaway bought was National Indemnity Company in 1967.

Since then Berkshire’s float has grown from $39 million in 1970 to $84 billion in 2014.

Float compounds like interest does.  But not only does float compound, if you use it right it also compounds the value of the company that owns the float.

Since 1967 when Berkshire bought National Indemnity, Berkshire’s stock price has risen from $20.50 a share to today’s price of $210,500.  Or a total gain of 10,268%.

This is the power of insurance companies when operated well.  And today’s recommendation is an insurance company that operates the right way too.

But before we get to that I need to explain how float makes this possible.

The Biggest Investment Secret Revealed

‘Float is money that doesn’t belong to us, but that we temporarily hold.”  Warren Buffett

Float is things like prepaid expenses.  Billings in excess of expected earnings.  Deferred taxes.  Accounts payable.  Unearned premiums.   And other liabilities that don’t require interest payments.

But they are the farthest thing from liabilities.

Instead of paying this money out now like normal liabilities.  Companies can use these “liabilities” to fund current operations.

Float is positive leverage instead of negative leverage like debt and interest payments.

Think of float as the opposite of paying interest on a loan.  Instead of paying the bank for the cash you’ve borrowed.  The bank pays you interest to use the money you loaned.  And you can use this money to invest.

Using cost-free float to fund operations can improve margins by up to a few percentage points.

The best way to explain why float is so important is with the following quote:

“Leaving the question of price aside, the best business to own is one that over an extended period can employ large amounts of free – other peoples money – in highly productive assets so that return on owners capital becomes exceptional.”  Professor Sanjay Bakshi adding to something Warren Buffett said about great businesses.

I said in last month’s issue: “When a company’s float/operating assets ratio is above 100% it means the company is operating with “free” or cost-free money.”

But this isn’t true with insurance companies.

For an insurance company to operate on a cost-free basis it has to produce underwriting profits for a sustained period.

I look for underwriting profits of at least five years straight to consider its float cost-free.

And the company I’m going to tell you about today has earned an underwriting profit every one of the last 10 years.

When you come across companies that are able to do this on a consistent basis you should expect exceptional returns in the future.

This is because when a company operates its entire business on a cost-free basis it means several things. 1)  It’s a great business.  2.)  It’s an efficient business.  And 3.) float magnifies profit margins.

So what is this great company?

To find out Subscribe here.

And remember Value Investing Journey subscribers get a 50% discount on a Press On Research subscription.  To get this discount subscribe to Value Investing Journey here.

Six Books Added To Next Prize Pool

Six Books Added To Next Prize Pool

Last week I announced the winner of the first prize pool.  And announced the first book added to the next giveaway when the blog reaches 500 subscribers.

The Paperback of: Monsoon - The Indian Ocean and the Future of American Power added to the next giveaway when we reach 500 subscribers.

If you're interested in global strategy.  And brief histories of global trade in Southeast Asia, India, Pakistan, the rest of The Subcontinent, Indonesia, and other Pacific countries you'll love this book.

I'd rate the book 5/5.

Today I'm adding five more books to the next giveaway.

The hardcover of: Rogue Elephant - Harnessing the Power Of India's Unruly Democracy.  This book takes an in-depth look at the problems with, solutions to, and hope for India's democracy.

The book takes a mostly negative view of the problems and corruption within India's democracy.  And since I haven't visited the country yet - plan to - I can't tell you my thoughts on whether the book is right or not.

Saying that I'd rate the book 4/5 until I can visit myself.

The hardcover of: The Big Rich - The Rise and Fall of the Greatest Texas Oil Fortunes.  I've not read this book yet so below is from Publishers Weekly talking about the book.

From Publishers Weekly

Starred Review. Capitalism at its most colorful oozes across the pages of this engrossing study of independent oil men. Vanity Fair special correspondent Burrough (coauthor, Barbarians at the Gate) profiles the Big Four oil dynasties of H.L. Hunt, Roy Cullen, Clint Murchison and Sid Richardson, along with their cronies, rivals, families and, in Hunt's case, bigamous second and third families. The saga begins heroically in the early 20th-century oil boom, with wildcatters roaming the Texas countryside drilling one dry hole after another, scrounging money and fending off creditors until gushers of black gold redeem them. Their second acts as garish nouveaux riches with strident right-wing politics are entertaining, if less dramatic. Decline sets in as rising production costs and cheaper Middle Eastern oil erode profits, and a feckless, feuding second generation squanders family fortunes on debauchery and reckless investment—H.L.'s sons' efforts in 1970 to corner the silver market bankrupted them and almost took down Wall Street. This is a portrait of capitalism as white-knuckle risk taking, yielding fruitful discoveries for the fathers, but only sterile speculation for the sons—a story that resonates with today's economic upheaval. (Jan. 27)
Copyright © Reed Business Information, a division of Reed Elsevier Inc. All rights reserved. --This text refers to an out of print or unavailable edition of this title.

The hardcover of: Founding Brothers.

If you're at all interested in The Revolutionary War era in the United States you'll love this book.

I've studied US history a lot, but this book taught me some things I've never read anywhere else about America's Founding Fathers.

I'd rate this book 4.5/5.

Paperback of The World Is Flat

I've not read this book yet so below is a description from the Washington Post.

Captivating . . . an enthralling read. To his great credit, Friedman embraces much of his flat world's complexity, and his reporting brings to vibrant life some beguiling characters and trends. . . . [The World is Flat] is also more lively, provocative, and sophisticated than the overwhelming bulk of foreign policy commentary these days. We've no real idea how the twenty-first century's history will unfold, but this terrifically stimulating book will certainly inspire readers to start thinking it all through. (Warren Bass, The Washington Post)

And the last book added to the next prize pool today is a hardcover of: StrengthsFinder 2.0.

I've not read this book yet so below is a review from the most helpful review on Amazon.

545 of 624 people found the following review helpful
5.0 out of 5 starsWhat are the strengths YOU can rely on?, July 14, 2009
This review is from: StrengthsFinder 2.0 (Hardcover)
Strengths Finder 2.0 is the follow up to Gallup's Now, Discover Your Strengths. The book includes a revamped version of the StrengthsFinder test that shows you not just what your top five strengths are, but also how you rank in the rest of the 34 strengths from Clifton's model. The new book is light on content (very light) but the test is a substantial improvement.Here's how the book is set up:StrengthsFinder: The Next Generation
(A short introduction explaining the need for the enhanced edition of the test based upon new thinking and research in strengths psychology)I: Finding Your Strengths
(A 30-page overview of strengths psychology and how the Gallup system works)II: Applying Your Strengths
(150 pages outlining each of the 34 themes including what people with that strength look like, how to manage them, and ideas for action if you have that strength).

The StrengthsFinder
(If you haven't taken it before, the code to take the test is provided in a packet inside the book. You actually have to buy the book to take the test)

Emotional Intelligence 2.0 is another book I really enjoyed that follows the SF 2.0 format. Obviously, that test measures emotional intelligence (EQ), but Emotional Intelligence 2.0has a unique format where the test tells you which of the book's 66 strategies will increase your EQ the most.

Already more than $80 worth of prizes are now in this prize pool.  And this will continue to build while we approach 500 subscribers.

To make sure you have a chance to win these books subscribe here.

Six Days Until Release Of Next Press On Research Issue

Six Days Until Release Of Next Press On Research Issue

Below is a three page unedited and unfinished excerpt from the next Press On Research issue.  To release July 21 2015.

The Biggest Investment Secret In The World

How Warren Buffett Got So Rich And How You Can Too

Warren Buffett is admired around the world for his philanthropy.  He plans to donate 99% of his $70 billion plus net worth to charity when he dies.

And he can donate so much money because of how great an investor he is.

But almost no one knows how Warren Buffett made his fortune.

Yes, most investors know about his investments in Coke (K), Johnson & Johnson (JNJ), and Wells Fargo (WFC).  But this isn’t how he built his fortune and Berkshire Hathaway.

Investor’s who’ve studied Buffet know he built his partnership, and then Berkshire Hathaway, buying small companies.

But this still isn’t the true secret to Warren Buffett’s success.

Today I’m going to tell you how he built an initial $100,000 of investable money into more than $70 billion.  And tell you how we can start doing the same things Buffett did.

So we can start building our own fortunes by owning a safe, small, investment he would buy if he were starting to invest today.

But before we explain the exact companies Buffett built his fortune on.  We need to talk about why Press On Research concentrates on small caps.

A University of Kansas student asked Buffett about this in 2005:
“Question: According to a business week report published in 1999, you were quoted as saying: “It's a huge structural advantage not to have a lot of money. I think I could make you 50% a year on $1 million. No, I know I could. I guarantee that.”…would you say the same thing today?” 

Here’s Buffett’s answer:

“Yes, I would still say the same thing today. In fact, we are still earning those types of returns on some of our smaller investments. The best decade was the 1950s; I was earning 50% plus returns with small amounts of capital. I could do the same thing today with smaller amounts. It would perhaps even be easier to make that much money in today's environment because information is easier to access.

Yes, I’ve said this before many times.  But it’s an important concept to understand.

Small ultra safe investments that produce a ton of cash.  Have little to no debt.  Pay dividends and buy back shares.  And are cheap are my favorite investments.

These kinds of businesses are what Value Investing Journey and Press On Research is all about.

Today’s recommendation has no debt.   Is undervalued by every one of my conservative valuations.  Owns more cash, cash equivalents, and short term debt equivalents than its entire market cap.

Just its net cash, cash equivalents, short term debt equivalents make up 77% of the companies market cap.  And its more profitable than its competition.

This doesn’t count any of its property, plant, and equipment, future premiums earned, or cost free float.  And this company is undervalued by 29% to 70%.

Today’s pick isn’t just a great company with all the above traits.  It’s also in Buffett’s favorite industry to invest.

To see the rest of this 27 page issue.  What the company is.  And the three other Press On Research picks up to this point.  Subscribe here.

And remember Value Investing Journey subscribers get a 50% discount on a Press On Research subscription.  To get this discount subscribe to Value Investing Journey here.

Announcing The Press On Research Site

Announcing The Press On Research Site

 

This past weekend I announced Press On Research subscribers were getting beta access to a brand new site.

Well today I'm announcing what that site is.

Press On Research High Def

It's the new Press On Research standalone site.

This new site will now host all things Press On Research.  An archive on the new site has all past Press On Research issues.  And Press On Research subscribers now have access to a member's only forum.

In this forum subscribers can talk about the monthly issues.  Give feedback on what needs to improve going forward.  Talk about and give feedback on ideas I'll post that will help guide the future of Value Investing Journey and Press On Research.  And get to know other subscribers.

My brother did a great job building the site, but if you have any feedback on how we can improve it please let me know at jasonrivera@valueinvestingjourney.com

And if you're looking to build your own site, contact my brother here.

If you're a Press On Research subscriber, please let me know in the comments below what you think of the new site.  And if you're not a subscriber tell me what would get you to subscribe to Press On Research.