Login | September 01, 2026
Points, Points, Points
Motley Fool
Published: September 1, 2026
Q. What are financial "points"? -- G.L., Decatur, Georgia
A. There are a few different kinds. If you're taking on a mortgage, you can typically opt to pay one or more "points" in order to lower your interest rate (and, thus, your monthly payment). A point is set equal to 1% of your loan value, so with a $300,000 mortgage, paying a point would cost you $3,000.
Then there are "basis points," which represent one one-hundredth of a percentage point, or 0.01%. If an interest rate rises from 3.45% to 3.55%, it has gone up by 10 basis points.
Stock market indexes can also be measured in "points" rather than dollars to avoid confusion (because they weight some stocks more than others). For instance, the Dow Jones Industrial Average or the S&P 500 will rise or fall by a number of points each day.
Q. Should I invest only in profitable companies, avoiding companies posting losses? -- M.B., Sioux City, Iowa
A. Not necessarily. Plenty of solid companies may post losses by choice, not necessity. For example, a young, rapidly growing business might choose to spend more than it earns to hire more people, buy more advertising or otherwise invest in future growth so it can compete successfully against rivals and increase market share.
Amazon.com, for example, spent years losing money while it invested in distribution centers and in research and development. It could have spent less and posted profits sooner, but that would have slowed its growth.
Of course, not all promising companies will turn out like Amazon. Dig deeper into any unprofitable company of interest, and invest only if you see a clear path to profitability. Remember that there are always plenty of profitable companies to invest in.
Fool's School
Is a Market Crash Coming?
Plenty of investors are worrying about an imminent stock market correction or even a crash. (A correction is generally considered to be a drop of 10% to 20% or so. A bear market is a long decline of more than 20% from a recent high, while a crash is sudden, steep and often 20% or more.) Are they right to worry? Well, we have long advised against trying to time the market or predict pullbacks, but it's not unreasonable to at least consider a pullback and to plan accordingly.
After all, there are multiple concerning signs -- valuations based on earnings are at or near levels that have preceded past bear markets or crashes.
Current geopolitical and economic conditions aren't exactly reassuring, either; concerns include tariffs, the war with Iran and the threat of inflation. Rising inflation will often lead the Federal Open Market Committee (FOMC) to raise interest rates, which is generally not great for business or the stock market, as borrowing money becomes costlier.
Also, the long-term average annual gain for the S&P 500 is close to 10% -- and we've now had double-digit gains in six of the past seven full years, including four years topping 25%. Plus, the S&P 500 was up 10.6% already in 2026 as of mid-July. Many individual stocks are now overvalued, and such relentless increases can't go on forever.
The stock market is volatile by nature. It has downturns every few years, such as 2022's correction of 18%, so you need to expect them. Ideally, plan to be a long-term investor, riding them out. (Downturns typically last a few months or years, but they could last longer.)
The next pullback might be years away, but it could certainly happen sooner. So don't keep any money that you'll need within five, if not 10, years in stocks. And perhaps sell some investments now, so you'll have cash on hand to pounce on stock bargains that result from a market downturn.
My Dumbest Investment
An Environmental Disaster
My most regrettable investment? Well, several decades ago, I had been investing in rental properties in California, which had been lucrative. But I wanted to be a stock investor, too. A friend who was a stockbroker put my small initial stake into some bonds earning 7.5%, and the blue-chip company Union Carbide. A few months later, a chemical leak at a Union Carbide pesticide factory in Bhopal, India, ruined my first stock investment. (The disaster was much worse for Bhopal, of course, as many thousands of people died.)
My real estate investments continued to do well, though; even into the 1990s, I could put $40,000 down on a $200,000 property, rent it out for a few years, and then sell it for a profit. I've now had 20 years of success with a few stocks and mutual funds, as well. -- R.R., Oceanside, California
The Fool responds: Union Carbide had trouble recovering from that disaster. It paid a $470 million settlement to the Indian government and ended up being acquired by Dow Chemical, which said that the settlement had resolved all claims. Investing in stocks does carry some risks -- as does investing in real estate -- which is why it's good to spread your money across multiple types of assets.
(Do you have a smart or regrettable investment move to share with us? Email it to TMFShare@fool.com.)
Foolish Trivia
Name That Company
I trace my roots back to 1972, when two fellows invested $25,000 each in a new type of business, opening a storage facility in California. They aimed to keep adding locations until demand dried up, but that hasn't happened yet. Today, based in Frisco, Texas, I'm the world's largest owner and operator of self-storage facilities, with 3,500-plus facilities in 40 states serving more than 2 million customers. My market value was recently $58 billion. My roughly 260 million net rentable square feet make me one of America's largest landlords; I've invested in European storage facilities, too. Who am I?
Last Week's Trivia Answer
I trace my roots back to 1837, when I opened my first store in New York City, selling almost $5 worth of goods that day. My "Blue Book" direct-mail catalog debuted in 1845. I've sold jewelry to Abraham Lincoln and John F. Kennedy. In 1885, I redesigned the Great Seal of the United States, which is featured on dollar bills. My flagship location opened in 1940 on Fifth Avenue. I've created NFL and NBA trophies. In 2001, Pantone named a color for me. I was bought by the French luxury conglomerate LVMH Moet Hennessy Louis Vuitton in 2021. Who am I? (Answer: Tiffany)
The Motley Fool Take
Passive Income From Burgers
In late 2025, McDonald's (NYSE: MCD) announced it had increased its dividend -- for the 49th year in a row. You don't create a record like that by accident. The company is one of the world's largest fast-food chains, operating at a scale hard to comprehend, with over 45,000 locations across more than 100 countries.
The key to the story, however, is that 95% of McDonald's locations are franchises. It basically collects rent and royalties from its franchisees, making it a fairly stable business. Restaurant concepts go in and out of favor over time, but McDonald's has been a long-term survivor. And despite a recent pullback in the stock -- McDonald's was recently trading near its 52-week low -- the business is performing reasonably well, with first-quarter 2026 consolidated revenue up 9% (4% in constant currencies) and adjusted earnings per share up 6%. That's impressive for such a large business.
McDonald's may not be a growth machine, but it's certainly a dependable and stable long-term investment. And let's not forget the dividend income it can provide you, with its recent 2.8% dividend yield. The stock was recently down around 13% year to date. With a reasonable recent forward-looking price-to-earnings (P/E) ratio below 21, McDonald's is a top dividend stock you can comfortably hang on to for the long haul. (The Motley Fool recommends various options on McDonald's.)
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