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
Compounders…they’re a rare breed. Even rarer is a compounder at a cheap price. Below I’ve created the following screen to make things a little easier for you. It’s a simple screen. All I’ve done is compile companies which have grown free cash flow by a minimum of eight periods out of an 11-year stretch. I also made sure each business had an average return on invested capital of 20% or above over the same period. Read More
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.
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
There are two types of value investors. Those in the Benjamin Graham camp (value) and those in the Warren Buffett camp (compounders). Both look to buy business for far less than they’re worth. However, that doesn’t mean they both look for the same types of businesses.
This month we’re going to look at two screens. Each screen includes 20 stocks which are spread across US, Australian, Canadian and London exchanges.
I can’t put any top spin on the ball. My backhand usually lands outside the lines. It’s safe to say I’m no tennis pro. But that doesn’t stop me from trying.