Making Cents Sense

The finance industry loves forecasts the way ancient sailors loved the stars: not because they were accurate, but because they were comforting. Every year—often every quarter—markets are flooded with outlooks, targets, scenarios, probability cones, and conviction-weighted guesses dressed up as insight. Growth will slow. Inflation will cool. Rates will fall. Volatility will spike, then normalize, then spike again. The narratives change, the confidence does not. Yet the most durable investors—individuals, institutions, and businesses alike—tend to share one inconvenient habit: they spend very little time predicting markets. Instead, they manage volatility the same way competent operators manage electricity, logistics, insurance, or cybersecurity. They treat it as a cost center . This shift in mindset—away from forecasting and toward cost control—is subtle, unglamorous, and deeply unfashionable. It also works. The Forecasting Trap Forecasting appeals to the ego. Risk management ap...

Most investors say they want high returns. What they actually need is survival . That sounds obvious, almost trivial. And yet, the majority of investing mistakes—blown-up portfolios, emotional capitulation, decade-long underperformance—trace back to one failure: not respecting asymmetric risk. Asymmetric risk isn’t about swinging for the fences. It isn’t about clever leverage, market timing, or secret signals. It’s about structuring your decisions so that the downside is limited while the upside remains open . In other words: you don’t need to be right often. You need to avoid being catastrophically wrong. This idea sits at the core of professional risk management, but it’s rarely taught clearly to individual investors. Instead, people are fed narratives about returns, confidence, and long-term optimism—while the math of loss quietly does the real damage. This essay breaks down what asymmetric risk actually is, why capital preservation matters more than maximizing returns, and how...

4 There’s a number investors love more than almost any other: yield . It looks clean. It looks comforting. It looks like certainty in a chaotic world. A 6% yield. An 8% yield. A double-digit yield that practically purrs from the screen. And yet, yield is one of the most deceptive numbers in finance. Not because it’s fake—but because it’s incomplete. What matters isn’t what an investment claims to pay. What matters is what you actually keep after inflation, after taxes, and after accounting for risk . Strip those layers away, and a surprising amount of “income” turns out to be illusion. This is the uncomfortable but necessary conversation about real yield —the kind that pays your bills in the future, not just flatters your spreadsheet today. 1. Nominal Yield vs. Real Yield: The First Reality Check Nominal yield is the headline number. It’s the dividend yield, the coupon rate, the stated payout. Real yield is what’s left after inflation erodes purchasing power . If an investment yields ...

Dividend investors love certainty. Or at least the illusion of it. Quarterly payouts arrive like clockwork—until they don’t. And when a dividend cut hits, it never feels random in hindsight. The warning signs were there. They’re always there. The problem is that many investors were watching the wrong numbers. Earnings per share. Payout ratios. Adjusted EBITDA. Management “confidence.” All useful. None sufficient. If you want a cleaner, more honest signal of dividend safety—especially in volatile or slow-growth environments—you need to pay closer attention to cash , not accounting optics. And one of the most underappreciated tools for doing that is the cash coverage ratio . This ratio doesn’t care about creative accounting. It doesn’t reward optimism. And it doesn’t give management much room to hide. It simply asks: Does this company actually generate enough cash to support its dividend? Why Dividend Cuts Are Rarely a Surprise Dividend cuts feel sudden only if you weren’t look...

Income investing is often sold as a scavenger hunt for the biggest number on the screen. The higher the yield, the better the stock—end of analysis. That mindset works right up until it doesn’t, which is usually the moment a “safe” dividend gets cut, a balance sheet buckles, or investors realize they were paid generously right up until the business quietly ran out of money. Capital-intensive industries are where this illusion gets exposed most brutally. Utilities, pipelines, telecoms, industrials, transportation, energy infrastructure, data centers, and heavy manufacturing don’t exist to produce elegant margins or viral growth stories. They exist to build, maintain, and operate expensive physical systems that society depends on. Steel, concrete, fiber, rails, turbines, ports, fabs—this is the unglamorous backbone of modern life. And because these industries must spend enormous amounts of money just to stand still, income investing in them is not about yield. It’s about endurance. ...