Companies with low balance sheet accruals out performed companies with high balance sheet accruals by 8-10%. Majority of my focus has been on cash flow where there is less room for accounting manipulation because in the real world, we pay cash for something and receive cash for products or services rendered. Accrual accounting attempts to fix such issues by matching costs with related revenues but he problem is that this method introduces subjective judgments and assumptions. Here are some other quick observations regarding accrual accounting you need to understand.
3 Ways You can Find Out Market Expectations of a Stock
I’ve recently been putting more weight to the question of “What are the expectations for this stock?”.
Rather than purely concentrating on a bottom up approach where I value the assets, cash flow and growth to come up with a range of intrinsic values, questioning what the markets expects out of the stock adds another dimension to the valuation process.
How to Perform an Asset Reproduction Value Analysis
First step in a Graham and Dodd valuation is to calculate the asset value of a company. Rather than making this the first and only step, you need to go further to check the reliability of the data and strategic direction of the company and industry to determine what the actual cost of the balance sheet really is.
The Expectations Built into GRVY is Dead Wrong
All three asset valuations are higher than market value, thus the market is expecting GRVY be a destroyer of value. Looking at the financial statements and following the company for a couple of years now shows that to be completely false. This visual representation shows what each valuation is made up of based on the market price.
200 Companies from 2009 Revisited and Revalued
Going through the list of Forbes Best Small Companies has become a tradition at Old School Value.
In this post, I show you how I went through 200 stocks and provide the stock valuation as well as commentary on each one.
I’ve done most of the work for you. See which ones are the best investments now.
I know “More than You Know”
Mauboussin’s book, More than you know, is a collection of his academic papers and essays ranging from behavioral finance, decision making and stress to ants and slime.
Doesn’t make sense right? Well Mauboussin is a firm believer that you have to think broadly and borrow ideas from multiple disciplines, much like Charlie Munger’s thinking models.
My Gambling and Speculating in Pink Sheets
This is what I said a couple of weeks back.
“I have 50% of my portfolio in my top 3 positions. None of the losses has been realized and I’m content to wait it out… 3 out of my top 4 holdings are listed on the pink sheets or ADR.”
The Key to Beat Mr Market is to Beat Stress
What the market gyrations does to you is that it causes stress, and stress puts you on high alert. This alertness and being on edge encourages short term focus.
You’ve experienced this yourself. You have a deadline approaching within a couple of hours and you’re furiously trying to complete a test,assignment or project. You become focused on the short term deadline. Nothing else.
Buffett’s Portfolio Strategy Secret to 31% Annual Gains
I was going over Buffett’s old letter to shareholders during his partnership years, and it blows me away the level of success he was able to achieve. For 11 years from 1957 to 1968, Buffett not only beat the market, he never had a down year. On a cumulative basis, his partnership achieved 2610.6% gains at a compounded rate of 31.6%!
On Sale. 40% off my Highest Conviction Pick.
The world will continue to become more sophisticated. Smartphones are beginning to enter the 3rd world countries, LCD TV’s used to cost $10k but is now a commodity, and the demand for defense and green energy is high on the list.
And how will you take advantage of it?
