Be Kind

I am back from TX. In Dallas my brother Alex and I had the pleasure of spending four hours with John Mauldin. Our visit with him started in John’s apartment in downtown Dallas and continued in a bar at a nearby hotel. A lot of my readers are familiar with John, but for the few who aren’t, let me introduce him. John is an economist, a thinker, and an incredible writer. He has written half a dozen books, and he writes probably the most popular (free) investment newsletter in the world – it’s read by millions.

General Electric’s collapse should have served as a reminder that buying a company based solely on past reputation and dividend yield is a dangerous endeavor. GE is also a great example that dividends are not paid out of earnings, especially massaged-to-death non-GAAP earnings, but from free cash flows. GE’s non-GAAP earnings were double its dividend payment.