Quantitative Analysis Explained: Absolute vs Relative Valuation

Quantitative analysis for stocks means finding the value (or “valuation”) of a stock using numbers. There are two main quantitative valuation methods for stocks—relative and absolute. Both relative and absolute valuation metrics use numbers only. This makes them purely a quantitative type of analysis. Both have already been defined, so we don’t have to reinvent […]

Stock Market Cycles: How to Analyze and Profit

“Warren Buffett tells us, “The less prudence with which others conduct their affairs, the greater the prudence with which we should conduct our own affairs.” ― Howard Marks, Mastering The Market Cycle: Getting the odds on your side Stock market cycles, represented by the bear and bull markets, ebb and flow through time. Investing during different market […]

“There is Always a Bull Market Somewhere.” Or is there?

Brand new investors might look at a rising stock market and all-time highs as a potential indicator that stocks are expensive. However, new investors should consider the quote I heard from the popular Jim Cramer when I first started investing—that “there is always a bull market somewhere”. If there’s always a bull market somewhere, then […]

Assessing The Capital Allocation Skills of Management

Capital allocation is job number one for any management team. The problem is that most CEOs lack this skill, intending to build long-term value for both shareholders and the company. Warren Buffett talks about finding management teams he trusts, who act in the best interests of shareholders; part of that is the capital allocation for […]

Do you Trade Volatile Penny Stocks?

A common pitfall that I often see new investors fall into is that they get sucked into the “get rich quick” mantra that they think comes with the stock market.  Unfortunately, they think that this means that they have to invest in volatile penny stocks because of the high risk, high reward that comes with […]

Dividend Reinvestment Plan Example — When Total Return Multiplies

The compounding from dividends can be an incredible force. I have a dividend stock I’ve held and reinvested dividends in for over 5 years. I feel this stock is a great dividend reinvestment plan example especially to show how it literally multiples your total return. A dividend reinvestment plan, or DRIP, is one where any […]

The 7 Types of Capital Allocation and What They Mean for Shareholders

“Capital allocation is a senior management team’s most fundamental responsibility. The problem is that many CEOs don’t know how to allocate capital effectively. The objective of capital allocation is to build long-term value per share.” Michael Mauboussin As we will see, job number one for CEOs is capital allocation because those decisions drive returns for […]

6 (Secret Sauce) Lessons From My First Stock – a 10 Bagger

Are you looking for the grand secret sauce to turn every stock pick into a 10 bagger (10x return), and are you trying to do it in a very short time? Or are you just trying to buy your first stock, and want to see it double or triple quickly? Well that’s not what we’re […]

Which is Better – SPY or an Equal Weight S&P 500 ETF?

Lately there has been a lot of talk about ETF investing and how flawed some of the strategies can be, so I really wanted to take a little bit of a deep dive to see if this was true or not. The biggest issue I hear is that so many S&P 500 ETFs are weighted […]

How Compounding Dividends Make the “Secret Sauce” of the Stock Market

The sweetest source of returns in the stock market are compounding dividends. To generate serious wealth from investing, you need compound interest; and dividends provide you with the best of it. To understand this magic, you must understand the power of compound interest. Compound interest causes money to multiply. It’s like a tree. Notice how […]