How to Beat the Market with a Click of the Button

In many of his first year classes, Joel Greenblatt opens with a simple observation. He shows the class the highs and lows of stocks at random. As an example let’s look at three stocks that first popped into my head: Apple Inc. (NASDAQ:APPL), Evercore Inc. (NYSE: EVR) and Ford Motor Company (NYSE:F). In 2017, all three diverged in price significantly. The table below shows the high and low of each throughout 2017. Share the good Read More

Low Risk, High Uncertainty: From Richard Branson To Mohnish Pabrai

There are many famed drop outs: Steve Jobs, Bill Gates, Mark Zuckerberg and Michael Dell. Surely one of the most famed serial entrepreneur and drop out is Richard Branson. At 16, Branson gave up studies to start his own magazine business. The magazine was called ‘Student’. It was a mail order business, which created a revenue from advertising. With a steady readership, Branson thought he could also sell other product within the magazines. That’s when Read More

All Earnings Aren’t Created Equal: Judging Earnings Quality

Garbage in, garbage out. It’s a phrase typically used when talking about forecasting. Because it’s such a subjective art, your forecasts are highly dependent upon the assumptions you make. Lowering or increasing growth assumptions, discount rates and margins can drastically change what a financial model spits out. Hence, if your assumptions are garbage you’ll get a garbage valuation. Like I’ve mentioned before, there’s nothing wrong with creating financial models and forecasts. You’ll gain an intimate Read More

Forget Bonds. Stocks Provide Growth and Income

What’s better, stocks or bonds? Well it depends. If we were looking to for capital appreciation, then stocks are better. But if you wanted to create a steady reliable income, bonds are better. That’s the common thought anyway. But according to legendary fund manager, Peter Lynch, whether you want capital growth or income, stocks are the only answer. Share the good stuff

Financial Modelling: Assumptions Built on Assumptions

Wouldn’t it be great to know the future? Sure it might take the spontaneity out of life. But you could become the best investor ever. There is no such thing as a perfect investment record. Everyone picks up some losers along the way. But if you had an idea of what might happen, you could avoid the ‘bad eggs’ as they say. This is what financial models try to do. They predict what might happen Read More