Publications | Inkwell Capital

Inkwell's primary focus is on achieving satisfactory investment results for its clients. While we are busy with that, though, we want to engage you in the process by telling you our thoughts as we go about our business. We believe that the more you understand our investment philosophy and our way of thinking, the more comfortable you will be with our investment decisions.

Each quarter we write a letter to our clients which contains our reading of the current market climate and our thoughts on how best to navigate it. We also write occasional memos on topics that catch our eye or that we think might be interesting to our clients.

Below is a collection of these publications.

Memos

All-Time High

If All the Stocks On My Screen Are Red, How Can the Market Be Up?
The lion's share of the stock market's gains in 2015 have been driven by just a handful of companies.
Is the Market Over-Valued? Part II
A closer look at Robert Shiller's Cyclically Adjusted P/E (CAPE) valuation metric
Is the Market Over-Valued? Part I
A closer look at a market valuation tool known as the Buffett Indicator
Market at All-Time High... Now What?
When the market keeps touching record highs, does that mean it's time to sell?

Berkshire Hathaway

There's Scary Money in the Candy Business
How to turn $60 million into $2 billion, or a case study of See's Candies.
Buffett's Adventures in Oil
Warren Buffett's occasional forays into investing in oil, and how well they turn out.

Book Review

Capitalism Does Not Exist in the U.S.
For decades, Warren Buffett declined to buy any railroad or airline stocks, yet now he owns a railroad and significant stakes in all the major U.S. airlines. Why has he recently reversed course? One word: oligopoly.
Capitalism Without Capital
How is it possible for a company like Microsoft to hold only $36 billion of assets, yet have a market cap of nearly $1 trillion?
Avoiding Mistakes by Studying Mistakes
Even the greatest investors make mistakes. Here are a few classics to learn from.
Crash!
A closer look at five earlier stock market crashes and what lessons they hold for us today.
From Las Vegas to Wall Street
An MIT genius first conquers black jack then goes on to master the biggest casino of them all -- the stock market.
Shareholder Activism in the Last 100 Years
Benjamin Graham, Warren Buffett, and other legendary investors have sometimes had to actively engage with the managements of the companies they invested in, as detailed in Jeff Gramm's recent book Dear Chairman.
The Holy Grail of Investing
Is it possible to find a stock that will return 100 times your original investment?
The Outsiders
Review of a recent book about wildly successful CEOs.
The Most Important Thing
Review of a recent book by investing legend Howard Marks.

Economics

The Big and Strong Get Bigger and Stronger
The big tech stocks have been on a tear. Can they sustain that momentum, or will history catch up to them?
Kelly or Bust
How an economics experiment uncovered the simple secret to successful long-term investing: take a constant and moderate amount of risk then let the odds work in your favor.
Forecasting Is Hard
It's tough to make predictions, especially about the future. That's even more true in the stock market.
Absolute Zero
Economic forecasters tend to have a virtually unblemished record of failure.

Financial Planning

Which Will Live Longer: You or Your Money?
How much can a retiree safely withdraw from their portfolio and still expect that portfolio to go the distance?
You'd Better Pay Attention to FICO
Credit scores can be a mysterious part of the American financial system. Let us take you on a behind-the-scenes tour.
Getting to Know the Health Care IRA
IRAs and 401(k)s are great in that they are doubly tax-advantaged. Health Savings Accounts, or "healthcare IRAs," are triple tax-advantaged.
When to Take Social Security
The amount you receive in Social Security benefits depends on several factors. Here is a map to help you navigate the way.
Thinking of Taking a Loan from Your 401(k) Plan? Just Don't Do It
There are several different ways that taking a loan from your retirement account can come back to bite you.
How to RIG Your Retirement
How can you make sure that your money lives longer than you do?

Investment Analysis

Tesla and the One Trillion Dollar Mystery
Is Tesla really worth what it's trading for in the stock market? Can it ever grow big enough to justify its lofty valuation?
It's Good to Be the CEO
CEO pay is a perennial sore spot for shareholders. Sometimes, though, it can go from bad to egregious.
Mr. Market Is a Crazy Man
How is it that Starbucks' number of stores is up 5%, its revenues are up 6%, and yet its stock is up 64% over the past year?
CEO Compensation is Off the Charts
New regulations increase transparency into executive compensation. Will it change behavior?
It Only Takes Five Minutes to Ruin Your Reputation
Chipotle Mexican Grill has recently been struggling. Can it recover and hit its stride once again?
Even the Great Can Make Yuuuge Mistakes
It's always possible for an investor to make portfolio-destroying decisions, even for the legends of the game.
Buybacks Galore
Companies buying their own stock is all the rage right now. Should investors be excited about?
The Tortoise and The Hare, Revisited
How a slow-growing stalwart company can produce higher investment returns than a high-growth tech upstart.
Should You Add Some Gluten to Your Portfolio
Comparing the investment merits of two public fast-food chains.
Look Through the Windshield
In the investment world, the only time period that matters is the future.
The Power of Buybacks
Another look into the power of companies buying their own stock.
Know When to Buy 'Em
A case study in a company's history of judiciously buying their own stock.
Valuing a Stock
An attempt to define the intrinsic value of a particular stock.

Investment Basics

Investment Advisers Are in Love with ETFs
Beware the increasingly popular investment tool known as the ETF. They may give you the illusion of diversification, and they may cost more than you realize.
The Perils of Buying Low
Why the price for one share of stock is a nearly meaningless number.
Nasdaq's Funny Math, or How 22 Can Sometimes Be 50
There are many ways to average numbers. Always read the footnotes to find out if you're being hoodwinked.
Non-Linear Thinking
Compound interest can be hard to wrap your head around, but understanding it is essential to successful investing.
How Active Is Your Portfolio
If you want to beat the stock market, you have to be different.
Choosing an Investment Advisor
Looking for an advisor to manage your money? Here is the checklist you need.
A Winning Formula
There is more than one path to the top of the investment mountain: the DuPont formula shows how.
Blue Zones
Places on Earth with the highest longevity, and what lessons they hold for investors.

Investment History

From Railroads to Apple and Amazon
Apple is now worth over $1 trillion. We look back at former stock market pioneers and find some commonalities.
Feeding at the Trough of the Stock Market
Buying at a market trough is a wonderful thing. But those opportunities are so rare that it's not worth waiting for them.
America's Level of Margin Debt Can Be Scary
Margin debt as a percent of GDP is higher than ever.
The Sins of Investing (aka A Look Back at Our First Five Years)
A look back at the mistakes Inkwell has made in its first five years.
It's Always 1849 in the Stock Market
There's always at least one hot sector of the stock market. You don't have to follow everyone else into each new investing fad.
Que Sera, Sera, Continued
The stock market has been little more than flat over the recent past. What returns can investors reasonably expect going forward?
Que Sera, Sera
The future of the stock market is always hard to predict, but one long-term metric can give us a rough idea of what to expect.
The Market is Crazy
August 24, 2015 was a wild and crazy day in the stock market. Our suggested response to the madness.
How the Mighty Have Fallen
What does it take for a company to remain at the top of the Fortune 500 over the decades?
Which Presidential Candidate Will Have a Better Effect on the Stock Market
Will Obama or Romney be a better president for investors?

Investment Philosophy

Investing Lessons from a Jeopardy! Champ
James Holzhauer has made Jeopardy! history this year. His record-breaking run also provides an object lesson for us investors.
The Six Traits of Successful Money Managers
It takes much more than raw intelligence and knowing how to use a spreadsheet to make it in this business.
Are There Any Super Investors Today?
How ten current mutual funds stack up against the market.
Super Investors
Beating the market is possible, but might entail some short-term pain.
What Dilbert Can Teach Us About Investing
Dilbert creator Scott Adams has some words of wisdom for us investors.
Risk is a Four-Letter Word
Wall Street's definition of risk is wrong. We set the record straight.
Are You Too Smart for the Stock Market
How did Walter Schloss, who described himself as not very smart, crush the returns of a genius competitor?
Eggs in Too Many Baskets
The dangers of diversification.

Scams / Psychology

Be Careful Out There
The world is a dangerous place, and nobody is looking out for your best interests except for you.
Congratulations! You've Been Scammed
As long as there are humans, there will be scammers. Here are a few scams to watch out for, along with some ideas for avoiding them and for what to do if you fall prey to one.
The Other College Acceptance Scandal
Recent news stories have broken about how some wealthy parents have essentially bribed their kids' way into college. This article is about the scandal the rest of us face: how to afford it once our kids are accepted.
How Confident Are You in Your Financial Future?
Humans are weirdly over-confident about things they know nothing about. Don't let that hurt you financially.
Scams, Scams, Scams
There are hundreds of scams out there, trying to separate you from your hard-earned money. Be wary.
The Difference Between Available and Useful
Just because you have easy access to certain data does not mean that it will help you make good investment decisions.
Rich People, Beware
Rich people may be more susceptible to succumb to financial fraud. Make sure you're not one of them.
The Importance of Eating Your Own Cooking
Investment managers who invest the same way as their clients tend to earn higher returns.
How to Stop Hurting Yourself
Investors are too easily swayed by emotion, and can become their own worst enemy.
Wall Street's Finest
A look at the foibles of the Wall Street investment analyst community.
Over-Confidence and Other Biases
An overview of the many ways we can prevent ourselves from investment success.

Quarterly Commentaries

2024

Inkwell Capital Commentary Q1-2024

2023

Inkwell Capital Commentary Q4-2023
Inkwell Capital Commentary Q3-2023
Bonds are suffering, but Berkshire Hathaway is finally beating the market.
Inkwell Capital Commentary Q2-2023
For the first time in decades, market strategists predicted a down year for stocks. The S&P 500 is up 17% so far this year.
Inkwell Capital Commentary Q1-2023
Everything Everywhere All At Once: tech stocks on fire, regional banks collapsing, interest rates zooming higher, ...

2022

Inkwell Capital Commentary Q4-2022
2022 was a bad, bad, bad year.
Inkwell Capital Commentary Q3-2022
What 1980s one-hit wonder Bobby McFerrin can teach us about investing.
Inkwell Capital Commentary Q2-2022
The first half of 2022 was the worst start to the year for U.S. stocks in at least 60 years.
Inkwell Capital Commentary Q1-2022
Some stocks were COVID-related darlings (think Peloton or Zoom), but the wild ride appears to be over.

2021

Inkwell Capital Commentary Q4-2021
The stock market can sometimes produce counter-intuitive results. Last year saw a lot of fear and uncertainty, yet stock market returns were robust.
Inkwell Capital Commentary Q3-2021
Fear and greed are ever-present dangers with regard to investing in the stock market, but the best way forward is to avoid them both.
Inkwell Capital Commentary Q2-2021
Inkwell Capital celebrated its 10th anniversary during the second quarter. No investor is perfect, and this post-mortem analysis takes a hard look at the mistakes we have made so far.
Inkwell Capital Commentary Q1-2021
With the onset of the coronavirus pandemic now a year behind us, let's look at some of the timeless investing lessons re-learned during this tumultuous year.

2020

Inkwell Capital Commentary Q4-2020
Good riddance to 2020. Also, are we really at another all-time high in the stock market?!
Inkwell Capital Commentary Q3-2020
Will the upcoming presidential election affect our portfolios one way or the other? According to history, probably not.
Inkwell Capital Commentary Q2-2020
Amid madness on both Wall Street (bankrupt stocks soaring) and Main Street (people refusing to wear a mask), we remain focused.
Inkwell Capital Commentary Q1-2020
The world turned upside down this quarter, but let's not lose our investment heads in the process.

2019

Inkwell Capital Commentary Q4-2019
Everything in life, including the stock market, is cyclical. Where are we in the current cycle?
Inkwell Capital Commentary Q3-2019
It's amazing how wildly -- both in dollar terms and percentage terms -- some large, well-known stocks fluctuate in price from year to year.
Inkwell Capital Commentary Q2-2019
In this topsy turvy stock market, bad news is sometimes seen as good while good news is seen as bad. What's an investor to do?
Inkwell Capital Commentary Q1-2019
Trying to time your entry and exit points in the stock market may seem like a sensible plan, but it's not as simple as it first appears.

2018

Inkwell Capital Commentary Q4-2018
U.S. stocks recently crossed into bear market territory, and the bond market is signaling that a recession may be on the horizon.
Inkwell Capital Commentary Q3-2018
Interest rates are finally starting to rise. What does that mean for stock market investors?
Inkwell Capital Commentary Q2-2018
Lessons learned from a trip to Omaha for the Berkshire Hathaway annual shareholders meeting.
Inkwell Capital Commentary Q1-2018
Growth investing has earned higher returns than value investing lately. When will the tide turn?

2017

Inkwell Capital Commentary Q4-2017
2017 saw more than its fair share of political and meteorological calamities. So why was the stock market up 22%?
Inkwell Capital Commentary Q3-2017
Many signs point to an over-heated stock market.
Inkwell Capital Commentary Q2-2017
Pay no attention to the White House's current enthusiasm. It's Big Tech that's driving the market.
Inkwell Capital Commentary Q1-2017
A surprising answer to the question of what happens to the stock market following an all-time high.

2016

Inkwell Capital Commentary Q4-2016
An unlikely loser surfaced this election season: the polling industry.
Inkwell Capital Commentary Q3-2016
Our turnover has been very low recently.
Inkwell Capital Commentary Q2-2016
Panic over Brexit prompts us to say, "Keep Calm and Carry On."
Inkwell Capital Commentary Q1-2016
The stock market has just as many dips, dives, twists, and turns as an actual roller coaster.

2015

Inkwell Capital Commentary Q4-2015
What is the opposite of a New Year's resolution?
Inkwell Capital Commentary Q3-2015
When looking at stock market returns it is good to keep everything in perspective.
Inkwell Capital Commentary Q2-2015
While hitting for the cycle is a rare feat in baseball, investing for the cycle is something Inkwell strives for every day.
Inkwell Capital Commentary Q1-2015
Spring is Inkwell's favorite time of year, but it's not because of all the flowers and sunshine.

2014

Inkwell Capital Commentary Q4-2014
2014 was a year of surprises.
Inkwell Capital Commentary Q3-2014
How long does it usually take the stock market to double?
Inkwell Capital Commentary Q2-2014
Hop on the Buffett train--a look at the history of Berkshire Hathaway.
Inkwell Capital Commentary Q1-2014
How to live forever.

2013

Inkwell Capital Commentary Q4-2013
What's in a typical Inkwell portfolio these days?
Inkwell Capital Commentary Q3-2013
The stock market continues to hit new highs... now what?
Inkwell Capital Commentary Q2-2013
Will rising interest rates cause the stock market to sink?
Inkwell Capital Commentary Q1-2013
Compound interest--the eighth wonder of the world.

2012

Inkwell Capital Commentary Q4-2012
How much does GDP growth influence the stock market? Spoiler alert: close to none.
Inkwell Capital Commentary Q3-2012
Do you have the guts to be a value investor?
Inkwell Capital Commentary Q2-2012
Recap of our annual pilgrimage to Omaha, Nebraska.
Inkwell Capital Commentary Q1-2012
A tale of two companies--"it was the best of companies, it was the worst of companies."

2011

Inkwell Capital Commentary Q4-2011
Why we are bullish right now.
Inkwell Capital Commentary Q3-2011
What the recent volatility in the stock market should mean to you.
Inkwell Capital Commentary Q2-2011
Inkwell's first quarter--what you can expect from us, what we'll expect from you.