November 04, 2011

Starbucks Does Well By Doing Good

Starbucks reported earnings yesterday and profits were up 29% in the fourth quarter. The company bested Dunkin Donuts in same-store sales as well. Theirs rose 10% while its main rival's rose just 6%. The company credits its recent success with brand loyalty among its customers.

Bucks Jobs by Ben Taylor
source: Benjamin Taylor

I for one have been a loyal customer of Starbucks for many years. I also admired Starbuck's way of doing business. I always thought of the company as well run. However, during those years, Starbucks's stock remained at lofty prices and it wasn't until the Great Recession that the company's stock became reasonably priced. Since we bought it for the Core Portfolio at the end of 2008, it has returned nearly 336% for us and become our largest holding (as of 11/3/2011).


I believe one of the reasons Starbucks can generate loyalty amongst its customers is the social responsibility the company exhibits. Customers (and investors) want to be associated with a company they can feel good about. I also believe that companies that act responsibly also make good investments. Although Brick Financial does not engage in Socially Responsible Investing (SRI) as it is commonly known, I look for companies that have certain characteristics and these companies are typically good citizens. There has been some research to suggest SRI does in many cases outpace general market investing. The authors find:

In terms of firm level performance, we compare regular funds with replicating portfolios that have been adjusted for unethical companies according to a norm-based screening method. We find that the replicating portfolios perform better than the regular funds, suggesting that certain socially responsible practices affect fund performance positively.

Again, if a company does good, it is likely to be doing well. And vice versa. It is also likely to produce loyal customers like myself. As an example, I purchased my Let's Create Jobs For USA bracelet this morning and will be wearing it proudly.

Disclosure: At the time of this writing, I and the clients of Brick Financial Management, LLC owned shares of Starbucks (SBUX).

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September 09, 2011

Be Vigilant, Be Generous

Sunday will be the tenth anniversary of the terrorist attacks of September 11, 2001. I worked in the World Trade Center in downtown New York City at the time for Lehman Brothers. That particular day I was scheduled to be in our Jersey City offices across the Hudson River. I often think about how lucky I was, simply due to a scheduled monthly meeting, not to be in the direct line of fire. But then I am saddened by all those who lost their lives needlessly and so violently. Having been an eyewitness to the attacks and not in the direct line of fire, I have been given the peculiar gift of being able to enjoy the NOW.

source: HowardLake

Let’s face it, life is short and if you’re breathing, you are blessed. Even more so, if you have been fortunate enough to enjoy and benefit from the fruits of this nation, you are mega-blessed. And with those blessings I believe it is only right to pay homage in one form or another.

Poor and restricted are our opportunities in this life; narrow our horizon; our best work most imperfect; but rich men should be thankful for one inestimable boon. They have it in their power during their lives to busy themselves in organizing benefactions from which the masses of their fellows will derive lasting advantage, and thus dignify their own lives…

This, then, is held to be the duty of the man of wealth: first, to set an example of modest, unostentatious living, shunning display or extravagance; to provide moderately for the legitimate wants of those dependent upon him; and after doing so to consider all surplus revenues which come to him simply as trust funds which he is called upon to administer, and strictly bound as a matter of duty to administer in the manner which, in his judgment, is best calculated to produce the most beneficial results for the community…

- Andrew Carnegie, The Gospel of Wealth

The following are some favorite charities of mine. In honor of those who left us due to the events of 9/11/01, please consider these charities or donate to your favorite worthy cause.

Fight Gone Bad 6
On September 17, 2011, CrossFitters from around the world will come together to endure 17 minutes of one of our most grueling workouts in honor of those men and women who have given a lifetime of service and sacrifice. Proceeds go the The Special Operations Warrior Foundation.

Donate here.

NFTE (pronounced "Nifty")
The Network for Teaching Entrepreneurship's mission is to provide programs that inspire young people from low-income communities to stay in school, to recognize business opportunities and to plan for successful futures. Through entrepreneurship, young people discover that what they are learning in the classroom is relevant to the real world. To date, NFTE has worked with nearly 350,000 young people from low-income communities in programs across the U.S. and around the world.

Donate here.

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August 21, 2009

Support "Fight Gone Bad"

Fight Gone Bad 

Dear friend,

On September 26th, CrossFitters across the nation will unite for the fourth consecutive year to honor and support our injured service men and women and the thousands of people fighting and living with prostate cancer: Fight Gone Bad IV. One day. One workout. One Purpose.

Fight Gone Bad IV benefits Athletes for a Cure and the Wounded Warrior Project. There's no stopping us from making a difference and I hope you will support our efforts with any contribution you see fit. Last year we raised $627,000. This year, we are going for $1million. This goal will be reached one dollar at a time, in amounts ranging from $1 to $1000.

Please take a moment to give what you can to this important event. Click on the link below to connect to my personal fundraising page.

I would also like to invite you join our Facebook community and come meet all of the participants who are taking part and supporting Fight Gone Bad IV. You can join us here:

Thank you for your support. One Fight at a Time.

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February 13, 2009

"You Ought To Be Rich" at the Tao of Talani

Tao of Talani
Source: Tao of Talani

I would like to make you aware of a great new blog I think will be of interest to many of you who read The Third Pig. It is the Tao of Talani. In the About section of the blog you'll find Talani's story. He writes:

How does a skinny New York City kid grow up to rub elbows with Will Smith, Magic Johnson, Denzel Washington, CEO's, Politicians and other prominent figures? Simply, never define anything as IMPOSSIBLE. I didn't mention high profile names to impress but to impress upon you that anyone can create there reality.

He goes on to tell us his purpose for the blog:

In The TAO OF TALANI blog I share my experiences as a humble student, emphasizing there is no wrong or right way to achieve your goals. The blog is specifically designed for self-empowerment, entrepreneurs and lifehackers seeking to create a productive new reality. My objective is to be an asset to the collective by sharing knowledge from leading thinkers and doers.

Tuesday I contributing a post to the Tao of Talani titled, "You Ought To Be Rich". The post provides 10 simple but admittedly not easy steps to follow toward wealth. Please visit the blog and leave a comment there, or here, and let me know what you think.

Disclosure: none

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July 30, 2008

Difficult Decisions Made Easy

ChoicesEvery now and again we are presented with a choice to buy a new something or buy into a new idea. Often times these decisions are not the easiest to make. Do I buy the silver coupe or the red convertible? Sometimes the decisions are slightly easier. Do I accept the job working long hours for minimum wage or accept the million dollar inheritance from Uncle Ralph?

We at Brick Financial are often faced with the decision to add new positions to our clients’ portfolios. But our decision of whether to buy or not is often made easier by utilizing a simple technique. We simply compare the new position under consideration to what we already own. If we find after this comparison, that the new investment does not make our clients better off, we pass. This mental exercise saves of tons of time and effort. It eliminates 99% of the investments in the marketplace. Most just will not be up to snuff.

The beauty of this technique is that it can be applied to every day life. In managing your “life portfolio” you simply compare the new thing to what you already have in your possession. If you have children in a good school it might not be worth taking them out of the school they’re in unless the new school you’re considering produces Rhodes Scholars left and right. If you’re married, it’s probably not worth the headache and expense of divorce for a short-lived affair with the new office hottie. Well, maybe if it’s Angelina Jolie. Even then it’d be a close call.

The point is, your decisions become substantially easier to make if you are thinking about how they will improve your life. If it’s close, why bother. Your time is better spent relaxing with a Mai Tai than worrying about all the choices and decisions you need to make in life. Life is too short. Enjoy it.

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April 15, 2008

Charity (Should) Begin at Home


A few years ago the Center on Wealth and Philanthropy conducted a study examining trends on wealth and wealth transfer within the African-American community. What CWP found was not astonishing – African-Americans are generous with their money. This finding in right in line with a 2003 study reported in the Chronicle of Philanthropy that African Americans typically donate up to 25% more of their discretionary income than do whites.

CWP turned up some other some other not-so-surprising but all-to-disappointing statistics as well – African Americans have less money to go around than other racial groups. According to the study (2001 figures), African Americans made up 13.2 million U.S. households, about 12.4% of all households. Yet they only earned 7.1% of aggregate household income and only owned 2.5% of household wealth.

It’s a little self defeating to give more when you have less to give. Altruism has its place. But so does rational selfishness. I am not saying one should not be generous. What I’m saying is charity should start at home. Most millionaires agree. I am in wholehearted agreement with Warren Buffett who said:

“…I always had the idea that philanthropy was important today, but would be equally important in one year, ten years, 20 years, and the future generally. And someone who was compounding money at a high rate, I thought, was the better party to be taking care of the philanthropy that was to be done 20 years out, while the people compounding at a lower rate should logically take care of the current philanthropy.”

The African American community should take note. Invest for the long term in the stock market, accumulate wealth and then give it away. There’ll be more of it to give in the end.

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November 10, 2007

Eat Your Own Cooking

GhandiA popular story passed on about Mahatma Gandhi goes something like this: A woman brought her son to see Gandhi because he was eating too much sugar. And despite her vigilance, the boy could not seem to give up eating sugar, even though it was bad for him. And so the woman asked Gandhi if he would speak with the boy about his problem. Gandhi replied, “No, but bring him back in a week.” And so in a week the woman returned and once again petitioned Gandhi to speak with her son about his rather bad habit of eating too much sugar. Gandhi welcomed the boy and had a discussion with him about giving up sugar. The boy seemed affected by Gandhi’s advice and the woman thanked him deeply. As she turned to leave she asked him one final question, “Why did you see him today and not last week?” And Gandhi replied, “Because last week I was eating sugar.”

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November 26, 2006

Pay Your Taxes

Warren E. Buffett"Charlie [Munger] and I have absolutely no complaints about these taxes. We work in a market-based economy that rewards our efforts far more bountifully than it does the efforts of other whose output is of equal or greater benefit to society. Taxation should, and does, partially redress this inequity. But we remain extraordinarily well treated."

- Warren E. Buffett

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July 15, 2006

Buffett Gives It Away

Warren E. Buffett

[Fortune] Even so, you and Susie (Buffett) set up the Buffett Foundation way back in the 1960s, which means you obviously expected to be giving away money sometime. What was your thinking back then?

[Warren E. Buffett] Well, when we got married in 1952, I told Susie I was going to be rich. That wasn't going to be because of any special virtues of mine or even because of hard work, but simply because I was born with the right skills in the right place at the right time.

I was wired at birth to allocate capital and was lucky enough to have people around me early on - my parents and teachers and Susie - who helped me to make the most of that.

In any case, Susie didn't get very excited when I told her we were going to get rich. She either didn't care or didn't believe me - probably both, in fact. But to the extent we did amass wealth, we were totally in sync about what to do with it - and that was to give it back to society.

In that, we agreed with Andrew Carnegie, who said that huge fortunes that flow in large part from society should in large part be returned to society. In my case, the ability to allocate capital would have had little utility unless I lived in a rich, populous country in which enormous quantities of marketable securities were traded and were sometimes ridiculously mispriced. And fortunately for me, that describes the U.S. in the second half of the last century.

Certainly neither Susie nor I ever thought we should pass huge amounts of money along to our children. Our kids are great. But I would argue that when your kids have all the advantages anyway, in terms of how they grow up and the opportunities they have for education, including what they learn at home - I would say it's neither right nor rational to be flooding them with money.

In effect, they've had a gigantic headstart in a society that aspires to be a meritocracy. Dynastic mega-wealth would further tilt the playing field that we ought to be trying instead to level.

Read the entire article by clicking here.

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About Brick Financial Management, LLC

Blogged by Brick Financial

51 JFK Pkwy, 1st Fl. West
Short Hills, NJ 07078
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Brick Financial Management, LLC is a Registered Investment Advisor specializing in providing investment management services to individuals, families, organizations and institutions. We implement highly focused stock, bond, and balanced portfolios using an investment approach commonly referred to as value investing. Disclosure


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