One of the great tragedies in life is that most people forget what it is they set out to accomplish. In business, this phenomenon manifests itself most often as a man or woman who starts their own company to gain financial independence and control over their time only to find himself slavishly devoted to growing …
The Illusion of Record Profits
When managers talk about record profits, they often leave out one crucial detail that would allow shareholders and owners to view their performance in a more honest light: the change in capital at work in the enterprise. This seemingly small detail is actually one of the most important numbers any analyst, executive, owner, or lender …
Buying Call Options
Buying call options is the opposite of selling covered calls and is an extremely aggressive strategy. You can generate big losses, but if you’re right, huge (and I mean huge) gains. The only reason we are willing to do it with a very small percentage of our assets is because we have the liquidity, net …
Selling Covered Calls
The volatility in the markets has caused pricing for certain derivatives to shoot through the roof, allowing investors to earn huge returns by selling covered calls (also known as writing covered calls). Here’s an example of a real transaction involving selling covered calls that one of our businesses recently contemplated. Right now, we could purchase …
Writing Put Options on Abercrombie & Fitch
This blog entry is meant as an explanation of writing put options or selling put options and not meant to convey any opinion as to the suitability or prudence of investing, trading, holding, buying, or selling shares or put options in Abercrombie & Fitch or any other firm. It is purely for illustrative purposes as …
How We Approach Value Investing
At Kennon Green Enterprises, we approach value investing using an opportunity cost approach. That means we don’t get hung up on the idea of owning stocks or bonds, real estate or gold. Instead, we look around at all available opportunities that fall within our “circle of competence” – the things we understand, are passionate about, …