Volatility and long-term performance

Yale Professor Robert J. Shiller maintains a spreadsheet that has tracked the S&P 500 Index every month since January 1871. According to his data, the best one-year holding period rate of return was 139.8% (July 1932 to July 1933) and the worst was -63.8% (June 1931 to June 1932). However, the average of all possible one-year holding periods from January 1871 to December 2004 was 10.8%—a number that highlights the preferred odds for long-term investors.

Source: http://politicalcalculations.blogspot.com/

It’s all about the brand experience
“[A radio] reporter pointed out that the beans cost about a dime and the cup itself costs about a nickel, so why pay $4 for something that costs about 37 cents to make? The answer… was that it was not the quality of the product or the people serving the coffee but, rather, how a person felt when walking into a Starbucks. The company had differentiated itself by being trendy, playing nice music, and staying on the cutting edge. So, the $4 was not just for a cup of coffee; it was for the whole experience.”

Scott D. Welch, “Consulting to the Ultra Affluent.” CFA Institute, March 2008