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c5966

c5966
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  • Boeing: Flying Below Fair Value [View article]
    The only problem with your DCF analysis is that you didn't include a margin of safety to your fair value.

    Benjamin Graham preached the margin of safety.

    So, for example, applying a 25% margin of safety to your fair value means Boeing stock isn't a "buy" until it reaches $86.26 a share or below.

    The margin of safety helps to protect you from downside risk.
    Aug 21 03:00 AM | Likes Like |Link to Comment
  • Kellogg: Can It Recover? [View article]
    Five to ten years is way too to long a time frame to get that debt under control.

    Actually, I can live with the five years. It's the ten years that scare me.
    Aug 17 01:56 AM | Likes Like |Link to Comment
  • Investors Think About Risk Differently From The Finance Industry: Why This Matters [View article]
    Thank God I'm not in La-La Land! ;)
    Jul 20 04:03 PM | 1 Like Like |Link to Comment
  • Why Google Is Easily 15% Undervalued [View article]
    As a potential shareholder, doesn't it make more sense to base your model on free cash flow to equity, rather than the cash available to both equity and debt holders.

    I run my models using either the "traditional" definition of free cash flow -- or a variation thereof -- or I use Buffet's definition of free cash flow, what he calls "owner earnings". Which is the cash that can be taken out of the company and returned to shareholders as either dividends or share buybacks.

    The formulas you use are based on modern portfolio theory.

    Personally, I believe the Market is generally efficient, but not always all the time. Hence, as a value investor, I try to take advantage of some of these market ineffiencies.
    Jul 20 03:58 PM | Likes Like |Link to Comment
  • Investors Think About Risk Differently From The Finance Industry: Why This Matters [View article]
    That's the point I was trying to make.

    Over the long term, traders under perform long-term investors.
    Jul 20 03:36 PM | Likes Like |Link to Comment
  • Dividends Don't Matter In Retirement Either [View article]
    Earnings are not used to pay dividends, to buy back shares or to pay down debt.

    A company can only use its CASH to do these things.
    Jul 20 03:33 PM | Likes Like |Link to Comment
  • Dividends Don't Matter In Retirement Either [View article]
    Earnings follow cash -- not the other way around.

    Corporate decisions allow a company to choose went to recognize revenues or earnings.

    Unlike the cash on the cash flow statement.

    Either the company is producing cash or it is not.

    Deep Throat was right.

    Follow the money!

    LOL
    Jul 20 03:28 PM | Likes Like |Link to Comment
  • Dividends Don't Matter In Retirement Either [View article]
    Earnings are open to all kinds of corporate interpretations or manipulations -- free cash flow is not.

    Whether one uses the traditional definition of free cash flow or some variation there of, the cash on the cash flow statement is hard to fake. Either the company is generating cash to reinvest in the business or to return shareholders -- or it is not.

    Enron was generating earnings out the ying-yang. But at the same time, it was burning through BILLIONS of dollars of cash!

    And, we all know what happened to Enron and dozens of other companies that went belly up.
    Jul 20 03:21 PM | Likes Like |Link to Comment
  • Dividends Don't Matter In Retirement Either [View article]
    I once read an article which stated for the long-term investor, 40% of his or her over all returns come from reinvested dividends, versus long-term investing in stocks that pay no dividends.

    I tend to agree with this.
    Jul 20 03:13 PM | 1 Like Like |Link to Comment
  • Investors Think About Risk Differently From The Finance Industry: Why This Matters [View article]
    But dollar amounts matter. It has nothing to do with invading someone's privacy.

    If someone said their portfolio is up 35%, I want to know what is that in dollar amount and over what length of time.

    Up 35% or some other ridiculously high amount over a year's time means nothing. Only traders would be interested in such a figure.
    Jul 20 03:08 PM | 1 Like Like |Link to Comment
  • GE marginally higher after mixed results [View news story]
    I'm not one to defend layoffs, but obviously GE thinks it can do better with less people.

    As an investor, I have to say they don't call it capitalism for nothing. A publicly traded company's job is to make money for its shareholders.

    God knows this is great, because Social Security probably won't be there when I retire in the next several decades. So, I'm really counting on all the investing prowess I can muster until then.
    Apr 18 01:11 AM | Likes Like |Link to Comment
  • New Wal-Mart money service rattles payments sector [View news story]
    With the exception of Wal-Mart, all the other stocks you mentioned follow The Greater Fool Theory of investing.
    Apr 18 12:52 AM | Likes Like |Link to Comment
  • New Wal-Mart money service rattles payments sector [View news story]
    I'm sure WMT could open its own bank tomorrow, if it could get away with greasing enough palms in Washington. LOL
    Apr 18 12:49 AM | Likes Like |Link to Comment
  • The Cheapest High Growth Stock In The S&P Is... Rowan Companies?! [View article]
    Jeffrey, nice article!

    I'm curious about one thing though.

    Looking at Rowan's profitability on a cash basis over the last five fiscal years, things haven't been that great. Because over this period, the company has had negative "owner earnings" (i.e., Warren Buffet's version of free cash flow). Might this be one of the reasons that the share price is trading lower than it's intrinsic value?

    In other words, the company has invested heavily in capital expenditures, so there's no free cash flow left over to return to shareholders.

    What's your take?
    Apr 11 01:30 AM | Likes Like |Link to Comment
  • Requiem For Fallen Dividend Aristocrats [View article]
    With the exceptions of Key Bank and Fifth Third, the stocks listed at the top of your article are above their Graham Number. In other words, they are trading above their theoretical price ceiling.

    Dividend stocks are nice, but I at least want to buy them when they are undervalued.
    Mar 30 02:13 AM | 6 Likes Like |Link to Comment
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126 Comments
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