Historical Economic Data: 25+ Years (U.S.)
Updated – 11/17/23 It’s hard to understand the economy in general because there’s so much data, and it’s so often taken out of context. We will narrow down only the most critical indicators of economic development and examine real data published by government agencies to get context on these metrics. Macroeconomic data can help make […]
The Simple Way to Create Asymmetric Investing Performance
Asymmetric investing performance simply means that your gains are bigger than losses. For example, an investment that could gain 300% or more, but can only lose at most -100%, is an asymmetric opportunity. The truth is, ALL investors in the stock market can receive asymmetric results over the long term because the potential upside of […]
The Rise, Fall, and Rise Again of Warren Buffett’s GEICO Investment
Warren Buffett’s GEICO investment was pivotal for two of the greatest investors of all-time. The history of GEICO’s stock is fascinating, with many ups and downs. This post will discuss the rise, fall, and rise again of GEICO’s stock. It will talk about how Warren Buffett’s mentor, Benjamin Graham, bought GEICO and saw it become […]
What is a Good Number of Stocks to Own?
The number of stocks in a portfolio can have a major influence on your ultimate results as an investor. Because of this, every investor must answer the question: what is a good number of stocks to own? The short answer is that there is no right answer. The much longer answer is that it depends […]
The Meaning of “Fish Where the Fish Are” in Investing
“Fish where the fish are” is a quote by famous investor Charlie Munger to explain the art of value investing. All investors want to buy low, sell high. They want to buy a stock, and sell it some day at a higher price. Taken to the extreme, this core idea represents what value investing is […]
The Top Down Investing Strategy: Pros, Cons, Pitfalls, and a Hybrid Approach
Updated 5/5/2023 Fundamental investing can take two paths: “bottom up” or “top down.” One style of evaluating stocks is not better than the other. In fact, there are different types of both bottom up and top down investing within those main camps. And finally, there’s nothing stating that an investor needs to be either top […]
Stock Based Compensation Expense and FCF Explained In a Simple Way
Edited 3/24/2023 Accounting for stock based compensation expense can be tough. The numbers don’t always line up from the income statement to the cash flow statement. Also, stock based compensation (SBC) is either automatically included or excluded, depending on which Free Cash Flow formula you are using (FCFF or FCFE). Over the long term, the […]
Invested Capital Formula: The Exact Balance Sheet Line Items to Use
Updated: 5/22/2023 Invested capital is one of the main components of the popular Return on Invested Capital, or ROIC, metric. There are two main ways to calculate Invested Capital: I will show you the EXACT line items to use for each approach. Unbelievably, you can’t find this information anywhere on the internet. In this post, […]
NEGATIVE PE RATIO – What to Do?
Post updated: 7/14/2023 A negative P/E ratio can be concerning. You can’t really compare a negative P/E ratio with other stocks’ P/E’s. I’ll discuss 3 major reasons a company might have a negative P/E. This blog post will be split into these sections: [Click to Skip Ahead] Be sure to check out the Investor Takeaway […]
The Circuit City Bankruptcy: Hubris and Aggressive Overextension
With hindsight, the Circuit City bankruptcy looked like a similar story to Blockbuster’s. It was innovation, new concepts and businesses, defeating the old. However, there were clear red flags before this sudden collapse. We can see them by looking deeper at the accounting and financial statements of Circuit City. Circuit City collapsed very, very quickly. […]
