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

  • Another Dead Cat Bounce, We Haven't Bottomed Yet, Goldman Predicts S&P 2000 The Dow Jones has rallied to 22,327 over the past several days. However, we believe this is another dead cat bounce. We sold all our shares of United Health ...
    Posted Mar 30, 2020, 8:35 PM by Intelligent Investor
  • Coronavirus Is The Black Swan Event That Ended The Bull Market In 2020 A Black Swan Event is an unpredictable event that causes catastrophic damage to an economy. A few days ago, we wrote an article describing the coronavirus as a Black Swan ...
    Posted Mar 18, 2020, 9:21 AM by Intelligent Investor
  • Beyond Meat (BYND) and Dunkin (DNKN), The End Of A Tale Of 2 Speculative Stocks During a recession speculative stocks get pounded down to the ground. Thus, we sold all of our shares of Beyond Meat (BYND) and Dunkin' Donuts (DNKN). Beyond Meat is in ...
    Posted Mar 18, 2020, 9:22 AM by Intelligent Investor
  • The Dow Jones Rallies 1294 Points, Sold More Stocks On This Dead Cat Bounce The Dow Jones jumps 1294 points a few days ago, however, we believe that this rally is a "dead cat bounce". We have to wait for the next quarter's ...
    Posted Mar 16, 2020, 9:56 PM by Intelligent Investor
  • We Panic Sold Today was a really bad day in the market. The Dow Jones opened at negative 1000 points. It seems as if the coronavirus is gaining steam and is about to ...
    Posted Mar 18, 2020, 9:23 AM by Intelligent Investor
  • I'm Calling Tops, It's Over, The Bull Market Is Over, Here Comes The Bear Market, A Recession Is Coming We weren't sure yesterday that the bull market is over. In the morning today, the Dow Jones was up about 300 points, and I thought we were just having ...
    Posted Mar 1, 2020, 10:47 AM by Intelligent Investor
  • Went On A Selling Spree Today I think this stock market bull run is over. I just have a hunch that it's over. However, I've been wrong before. The deadly coronavirus outbreak seems to ...
    Posted Feb 24, 2020, 10:41 PM by Intelligent Investor
  • Sold Apple (AAPL) At What Looks Like A Peak Apple (AAPL) looks like it may have peaked at $325/share. News came out during the past couple of days that Apples largest factory in China that makes iPhones is ...
    Posted Mar 18, 2020, 9:26 AM by Intelligent Investor
  • Beyond Meat (BYND) and Dunkin (DNKN), A Tale Of 2 Speculative Stocks Last year, we bought Dunkin' Donuts (DNKN) and Beyond Meat (BYND). We couldn't find any bargains, so we invested a small amount in these 2 speculative stocks.I've ...
    Posted Mar 18, 2020, 9:27 AM by Intelligent Investor
  • Stocks That We Bought and Sold for the Past Year to Date Sold John Deere (DE), it is a cyclical business and the trade war the U.S. has with China isn't making things any better. Berkshire Hathaway also sold their ...
    Posted Jul 27, 2019, 12:04 PM by Intelligent Investor
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