Milk Your Profits

  • The Intelligent Investor milks the profits of a good business and doesn't sell unless the business has gone bad.

"Milk your profits" mean to never sell a highly profitable business.

Owning stock in a highly profitable company give us the following:

  • Increasing Dividend Yield
  • Compounding Interest
  • Rising Stock Price
  • All of the above for a very long time


Example 1: Coca-Cola

From 1988 to 1994, Warren Buffett accumulated stock in Coca-Cola for $1.30 Billion. As of 2014, his investment is worth $17 Billion. A 1,200% return in his original investment.


Initial Investment in 1994 Value as of Year 2014 Return on Original Investment
$1.30 Billion $17 Billion 1,200%


Coca-Cola's Stock Chart:
Stock Chart of Coca-Cola
Source: Thinkorswim by TDAmeritrade


Example 2: Wells Fargo

Warren Buffett's initial investment in Wells Fargo was in 1990. He invested $289 Million in the company. In 2014, the value of his investment ballooned to around $16 Billion. His return on his original investment is over 5,400%.


Initial Investment in 1990 Value as of Year 2014 Return on Original Investment
$289 Million $16 Billion 5,400%


Wells Fargo's Stock Chart:
Stock Chart of Wells Fargo
Source: Thinkorswim by TDAmeritrade


Example 3: American Express

From 1963 to 1964, American Express' stock price plunged from $67 per share to $37 per share. Knowing it was a highly profitable business, Warren Buffett started accumulating its stock. He had invested around $20 Million at that time. As of December 2014, the value of his investment has skyrocketed to the moon at a value of close to $2 Billion. That equates to almost a 10,000% return on his original investment.


Initial Investment in 1964 Value as of Year 2014 Return on Original Investment
$20 Million $2 Billion 10,000%


American Express' Stock Chart:Stock Chart of American Express
Source: Thinkorswim by TDAmeritrade


My Financial Analysis of Stocks

  • Berkshire Hathaway Sells Shares of PSX Berkshire Hathaway has been selling its shares of Phillips 66 (PSX). They held about 35 million shares of PSX stock as of the 2nd quarter of 2018, which is down ...
    Posted Aug 28, 2018, 1:32 PM by Intelligent Investor
  • Sold All of L Brands (LB) and Park Hotels and Resorts (PK) An article in CNBC scared us. The parent company of Victoria Secret, L Brands (LB) could be a broken company. ...
    Posted Jul 26, 2018, 3:41 PM by Intelligent Investor
  • We Sold All of Our Shares in PayPal, We Saw Something Else We Liked Better We dumped Paypal (PYPL). The P/E Ratio is currently at 66 which is very high. The slowdown in earnings and revenue does not justify a P/E Ratio that ...
    Posted Feb 3, 2018, 8:18 AM by Intelligent Investor
  • U.S. Bank's (USB) Return on Equity is Greater than Wells Fargo (WFC) We just realized that U.S. Bank's (USB) Return on Equity is the highest out of all the major banks. It is greater than Wells Fargo (WFC), J.P ...
    Posted Feb 3, 2018, 8:20 AM by Intelligent Investor
  • My Research 2017 View Analysis: My Research 2017
    Posted Jan 15, 2018, 4:12 PM by Intelligent Investor
  • Looks Like Capitulation in Viacom (VIAB) Capitulation is when large institutional investors give up on a stock and sell all of their holdings in that stock. Capitulation is a sign of a bottom for a stock ...
    Posted Nov 17, 2017, 10:38 AM by Intelligent Investor
  • IBM's Fortunes Finally Turns Around Today Warren Buffett purchased IBM shares in the year 2012 worth billions of dollars. Yet the stock has pummeled and has been pounded downwards for the past 5 years. The company ...
    Posted Oct 20, 2017, 1:58 PM by Intelligent Investor
  • Exchanged AT&T (T) for Time Warner (TWX) and Dumped Hilton Worldwide (HLT) I exchanged AT&T (T) for Time Warner (TWX). Their merger currently gives TWX a 6% premium. AT&T is offering $107/share for TWX. Time Warner is currently priced ...
    Posted Sep 1, 2017, 4:36 PM by Intelligent Investor
  • My Stock Holdings 2017 View Analysis: My Stock Holdings 2017Hilton Worldwide Holdings (HLT) split into 3 companies. So we now own the following 3 Hilton companies:1) Hilton Worldwide Holdings (HLT)2) Hilton ...
    Posted Aug 28, 2017, 6:46 PM by Intelligent Investor
  • Repurchased Apple After Warren Buffett Confirms He Purchased it As a rule-of-thumb, if an investment has a Return on Equity (ROE) of greater than 30%, it means the company has a Durable Competitive Advantage. Apple's Return ...
    Posted Jun 5, 2017, 12:35 PM by Intelligent Investor
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