Author Archives: Edward Brownlee

U.S. Credit Card Debt

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  1. Total U.S. credit card debt reached an all-time high in the first quarter of calendar year 2023, reaching $1.03 trillion, according to data released Tuesday by the Federal Reserve Bank of New York.

Rising credit card debt and auto loan balances helped to drive overall household debt levels up 1%, to $17.06 trillion for the quarter, the report showed. Overall household debt has spiked by $2.9 trillion since the end of 2019, before the pandemic.

Key facts:

  • The average American credit card debt balance is $5,910, as of the third quarter of 2022, according to Experian.
  • Americans have an average credit utilization rate of 28%.
  • Credit card interest rates have reached an average of 20.92%.
  • White Americans have the highest average credit card debt of any racial group at $6,940.
  • Higher earned income corresponds to larger credit card balances, but consumers in the middle income brackets are the most likely to have credit card debt.

References:

  1. https://www.fool.com/the-ascent/research/credit-card-debt-statistics/
  2. https://www.cnn.com/2023/08/08/economy/us-household-credit-card-debt/index.html

Return on Invested Capital (ROIC)

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  • The ROIC is the operating profit divided by the invested capital. It tells us how much money the company can generate with new capital by investing in profitable projects.
  • The ROIC basically explains how much shareholder wealth could be generated in the future and is oftentimes highly correlated with a high P/E.

Return on invested capital, or ROIC, is a valuable financial ratio  A high ROIC rewards companies that are able to produce the most net operating profit with the least amount of invested capital.

The basics of ROIC are very simple: it basically tells us how much profits are generated (financials statement) compared to how much capital is invested in the company (balance sheet), provided as a percentage. If the ROIC is 10%, it tells us that the company is generating $10 of profits with each $100 that it invested in the company.

ROIC is net operating profit minus taxes minus dividends divided by invested capital:

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ROIC is net operating profit minus taxes minus dividends divided by invested capital:

ROIC is a measure of how much cash a company gets back for each dollar it invests in its business.

ROIC is a much better predictor of company performance than either return on assets or return on equity. In ROA and ROE, the key metric is net income. Net income often has nothing to do with the profitability of a company. Significant expenses are not included in net income such as interest income, discontinued operations, minority interest, etc. which can make a company look profitable when it is not. Also, ROA measures how much net income a company generates for each dollar of assets on its balance sheet. The problem with using this metric is that companies can carry a lot of assets that have nothing to do with their operations, so ROA isn’t always an accurate measure of profitability.

ROE has similar limitations as ROA. ROE is a measure of company profit compared to shareholder equity. Although this might seem a reasonable metric, many companies use financial leverage to raise ROE. Companies often increase debt levels to repurchase shares, thereby increasing ROE. Using this financial leverage to affect ROE does not accurately reflect a company’s profitability, returns or long-term prospects.

Companies with higher-than-median ROIC (when viewed in conjunction with their overall capital-expenditure and operating-expenditure strategy) will deliver better returns.

Valuation biasedness is one of the most common investing errors.

Some investors prefer picking a stock which is “undervalued” rather than buying a more expensive stock with strong long-term fundamentals. As a consequence, they oftentimes end up with “value traps” which actually destroy shareholder value over time. One of the reasons for this is that they know how to “value” a company (via multiples etc.), but lack the ability to determine the quality of a company and its potential to drive long-term value for shareholders.

The most important metric will tell you whether you are buying a good company that is able to generate strong future shareholder wealth: the return on invested capital (“ROIC”).

Basically, investors should look for a high (+10%) and consistent ROIC. In the long run, the ROIC can be a leading indicator of what an investor may expect from longer term stock returns.

References:

  1. https://www.thestreet.com/opinion/10-stocks-with-high-return-on-invested-capital-and-why-you-should-care-13279076

September is Healthy Aging Month

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September is Healthy Aging Month

According to the Centers for Disease Control and Prevention (CDC), Adults aged 65 and older need:

  • At least 150 minutes of exercise a week (for example, 30 minutes a day, 5 days a week) of moderate-intensity activity such as brisk walking. Or they need 75 minutes a week of vigorous-intensity activity such as hiking, jogging, or running.
  • At least 2 days a week of activities that strengthen muscles.
  • Activities to improve balance, such as standing on one foot about 3 times a week.

If chronic conditions affect your ability to meet these recommendations, be as physically active as your abilities and conditions allow.

Examples of Aerobic Physical Activity
According to the CDC, aerobic physical activity or “cardio” gets you breathing harder and your heart beating faster. From pushing a lawn mower, taking a dance class, walking or biking to the store – these types of activities and more count. As long as you’re doing aerobic physical activities at a moderate- or vigorous intensity, they count towards meeting the aerobic guideline. Even something as simple as walking is a great way to get the aerobic activity you need, as long as it’s at a moderately intense pace.

Intensity is how hard your body is working during physical activity. Try a few of these aerobic activities:

  • Walking or hiking
  • Some forms of yoga
  • Some yard work, such as raking and pushing a lawn mower
  • Bicycle riding (stationary or outdoors)
  • Water aerobics

“Higher intensity exercise had greater improvements for depression and anxiety, while longer durations had smaller effects when compared to short and mid-duration bursts.

“We also found that all types of physical activity and exercise were beneficial, including aerobic exercise such as walking, resistance training, Pilates, and yoga

https://tinyurl.com/mt2j67jy

African American Experience during WWII

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African American Experience During World War II

The book provides a historical perspective of the 1.2 million African American service members’ experiences on the unit and personal level serving in a segregated U.S. military and for an American society that denied them equal opportunity and basic civil rights. African Americans served in every military branch (Army, Army Air Corps, Navy and Marine Corps).

Besides serving in segregated units, they were assigned menial tasks, provided inferior training and resources, denied opportunities to serve in combat units, and faced racism despite fighting for liberty, justice and freedom abroad while being denied those platitudes at home. Basically, they battled for liberty and freedom on two fronts? home and abroad.

 

Lessons from the book: From Failure to Success: Everyday Habits and Exercises to Build Mental Resilience and Turn Failures Into Successes

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Top 10 Lessons from the book: From Failure to Success: Everyday Habits and Exercises to Build Mental Resilience and Turn Failures Into successes By Martin Meadows

1. If you face a difficult problem and you tell yourself, “I don’t know how to deal with it,” you’ll think of reasons why you can’t do it — and not potential solutions. Your brain acts on your instructions, and it’s the words you use that steer your thinking process. If instead you tell yourself, “Okay, let’s find a way to figure it out,” you’ll think of potential solutions and probably solve the problem. Same problem, different words, different outcome. As powerful as our brains are, words can fool them — and you can use this phenomenon to your benefit.

2. Dwelling on your failure reinforces it and makes you less effective at dealing with future failures. Turning the failure into a lesson will help you to reinforce a positive coping mechanism.

3. The next time you fail, resist the temptation to let anger, frustration, discouragement or self-guilt make you give up. Give yourself time to process the negative emotions, and then make a list of the lessons you’ve learned from not reaching your desired outcome. This will help you develop a positive mechanism for coping with failure. When you transform a failure into a list of lessons, you’ll empower yourself by thinking in terms of possible ideas for improvement instead of poisoning yourself with negativity.

4. Whenever you find yourself angry at a situation you can’t change, remind yourself that it’s not up to you. Accepting that things are beyond your control will give you a sense of peace and enable you to move on. Peace of mind comes from focusing on what you can control instead of wasting your energy on things you can’t change. the only things you can always control are your own thoughts and subsequent beliefs, attitudes, and actions.

5. If you repeatedly fail with the same goal, it’s possible you set unrealistic expectations and are stuck in the false hope loop. To avoid failing due to unrealistic expectations, make sure to carefully research the feasibility of your goals. Does an average entrepreneur build a six-figure business in six months?

6. If you’ve already failed a couple of times and want to try again, consider completely changing your approach, rather than trying the same approach again and expecting different results. Perhaps the approach you’ve taken isn’t founded on healthy principles or doesn’t work in your unique situation. When you close your mind to alternative approaches, you can get stuck in the failure loop forever.

7. When setting a new goal and deadline, remind yourself that ultimately even if you don’t achieve something by your self-imposed deadline, you’re still farther ahead.

8. Sacrifice is necessary. Sacrificing less-important goals will give you more power to work on the most crucial objectives. Prioritize big life improvements like changing your diet, getting a better job, starting a business, or finding a life partner, over less significant objectives.

9. Embrace boredom. It’s exciting to set new goals or follow new strategies, but if you prioritize excitement over effectiveness, you’ll only lose focus and possibly fail. If something works, stick to it.

10. Practice defensive pessimism by imagining the worst and preparing for it. The next time you find yourself preparing for a situation that produces anxiety, come up with a list of everything that can go wrong. Then, address every item one by one by coming up with a list of possible solutions and implement them to reduce the risk of the setback happening.

11. If you don’t believe you deserve success, you’ll sabotage your efforts. If you limit your growth because you’re afraid of hurting others, remind yourself that becoming a better person gives you more resources to help them.

12. If you don’t recognize your strengths, make a list of your motivations, strengths, relationships, and other assets that can help you achieve your goal. Then think of past situations that you solved, thanks to these resources.

13. The best way to build long-term resolve is to develop a long-term passion that consistently motivates you to persist in spite of challenges. When performed over the long term, it will build up your reserves of mental strength while you’re enjoying yourself.

14. You must believe that if you persist at it, you will get better at it. You won’t stick to anything in the long term if you doubt your abilities to improve.

15. Find a way to introduce a big change in your life with little commitment and investment on your part. If it works well, make it a permanent change.

 

https://wa.me/2348087816044

Apple cider vinegar can lower blood sugar

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Registered dietitian Carol Johnston, a professor of nutrition and an associate dean in the College of Health Solutions at Arizona State University, has been studying the effects of acetic acid, the main component of vinegar, on diabetic blood glucose levels, since 2004.

“If I was to show that vinegar slows progression to diabetes, then I would need hundreds of people and millions of dollars to do the studies, because diabetes has a lot of causes, including genetics,” Johnston said.

But studies do show acetic acid can be used as one tool in helping people lower blood sugar. A 2019 randomized clinical trial found “a 10 point decrease in fasting glucose concentrations,” Johnston said. “They used two ‘spoons’ of vinegar in a glass of water twice a day.”

In Johnston’s research, the people who benefited most from the use of vinegar were insulin-resistant, a condition called prediabetes. “In those with prediabetes, it was too good to be true,” she said. “It fell a good bit and stayed that way. It may be this is the group that could benefit the most.”

It’s not just apple cider – the antiglycemic response can be induced by any sort of vinegar: red and white wine vinegars, pomegranate vinegar or even white distilled vinegar.

“Basically, what acetic acid is doing is blocking the absorption of starch,” Johnston said. “If my study subjects eat a starch and add vinegar, blood glucose will go down. But if they drink sugar water and add vinegar, nothing happens. So if you’re having bacon and eggs, don’t bother. It only helps if you are consuming a starch.”

“If you’re taking a diabetes drug, the vinegar could amplify the effects of your meds,” she warned, “and your doctor might want to adjust your dosage.” Studies show the vinegar can reduce blood pressure, triglycerides and total cholesterol in rodents fed a high-fat, cholesterol-rich diet. But full-blown studies have not been conducted in humans.

Freeman, who serves on the American College of Cardiology’s prevention board, said there could be some benefit because of its antioxidant properties, like other heart-healthy fruits and vegetables, such as broccoli and blueberries.

Dog Sitting on a Nail Story

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There is a story of an old man and his dog sitting on the porch. It’s hot outside. The old man is sipping on his lemonade and the dog is sitting next to him moaning in pain.

The neighbor across the street hears the dog moaning for several minutes, and his curiosity gets the best of him, so he approaches the old man.

He asks the old man, “why is your dog moaning?” The old man responds by saying: “the dog is sitting on a nail.”

Perplexed, the neighbor asks, “why doesn’t the dog just get up and move to another spot on the porch?”

The old man takes another sip of lemonade, smiles, thinks about his response and says, “it doesn’t hurt bad enough!”

Even though the dog was moaning in pain, the pain wasn’t “bad enough” for the dog to do something about it. Instead, all he did was moan.

All the dog really needed to do was stand up, move several inches, and find a comfortable spot on the porch to lay down.

People Can Be Like the Dog

This story describes human nature. People are comfortable, even if they are unhappy and are experiencing pain. We all have a comfort zone. Your comfort zone dictates your daily habits, thoughts, actions and success in life.

Additionally, people fear change. People also fear failure. Many people are unhappy with their lot in life, but they will not step out of their comfort zone and change. Why? Because the pain doesn’t hurt bad enough for them to make a change in their life. They believe the pain of changing is greater than the pain of staying the same.

It’s not until people get sick and tired of being sick and tired, and make the decision they will do whatever it takes, that they will change and do what they need to do.

Intrinsic Value by Warren Buffett

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Warren Buffett’s investment strategy is simple:

  • Buy businesses, not stocks. In other words, think like a business owner, not someone who owns a piece of paper (or these days, a digital trade confirmation).
  • Look for companies with competitive advantages that can be maintained, or economic moats. Firms that can successfully fend off competitors have a better chance of increasing intrinsic value over time.
  • Focus on long-term intrinsic value, not short-term earnings. What matters is how much cash a company can generate for its owners in the future. Therefore, value companies using a discounted cash flow analysis.
  • Demand a margin of safety. Future cash flows are, by their nature, uncertain. To compensate for that uncertainty, always buy companies for less than their intrinsic values.
  • Be patient. Investing isn’t about instant gratification; it’s about long-term success.

Warren Buffett is a proponent of value investing, which looks to find stocks that are undervalued compared to their intrinsic value.

Financial metrics like price/book (P/B), price/earnings (P/E), return on equity (ROE) and dividend yield carry the most weight on the Buffett scales. In addition, he seeks out companies that have what he calls “economic moats” – high barriers to entry for a competitor who may wish to invade the market and erode profit margins.

https://x.com/brianferoldi/status/1695438447417471471

MCT Oil

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MCT oil is a supplement from coconut and the molecules are smaller than those in most of the fats you eat, absorbed into the bloodstream quickly leading to higher energy level and more.

MCT Oil (Medium Chain Triglycerides) Benefits:

  • Promotes the growth of healthy gut bacteria, which strengthens the intestinal barrier.
  • Anti-Inflammatory
  • This oil can promote fat loss by increasing your metabolism, reducing body fat
  • Powerfully reduces appetite

Adding it to your morning cup of coffee, in your salad dressing, smoothies, and other non-cooked foods (it has a low smoke point, so avoid using MCT oil where heat is involved). Do not cook with it. Drizzle it over proteins and vegetables.

For beginners, start with 1 tsp.(4 grams) and scale up to 1 tbsp. (15 grams) per day.

Bulletproof Coffee

✔️ Brew a cup of high-quality coffee
✔️ Add 1-2 tablespoons of grass-fed butter
✔️ Mix in 1-2 tablespoons of MCT oil
✔️ Blend until frothy and creamy

Benefits:
✔️ Boosts mental clarity and focus
✔️ Sustained energy without the crash
✔️ Helps with weight management
✔️ Enhances cognitive performance

Quality matters! Use top-notch ingredients for maximum nutrients and effects.