A Stock Market Basics PDF Written By a Self-Taught Investor [Free Download]
Updated 4/21/2023 Starting anything new is scary, and investing is no different. We all have the same questions, where to start? It may seem overwhelming, but millions invest, and you can too. As a newbie, you most likely have lots of questions, like: Back in the day, okay, 2004, Geico ran a set of commercials […]
Defining a Good FCF Margin Formula: Basics, Examples, and Analysis
Updated 4/6/2023 FCF margin is a valuable tool for understanding how much free cash a company can generate from its revenues. In general, a higher FCF (Free Cash Flow) margin means a company doesn’t need to spend much money to create profits and free cash. Why is FCF Important? Free cash flow is the amount […]
Position Sizing for Beginners – The 3 Key Basics to Remember
Position sizing is something that’s discussed more in the trading world, but it’s just as important for the long term investor. Investors like to talk about diversification, and how holding 15-20 stocks seems to be optimal for outperformance. Position sizing becomes less clear when combined with dollar cost averaging (“DCA”). New investors may run into […]
The Basics Behind Using the Price to Earnings Valuation Method on a Stock
The price to earnings valuation method is a simple and quick way to get an idea about how cheap or expensive a stock generally is. Like any tool or framework, the price to earnings (or P/E) ratio is not a perfect estimate of valuation and has its drawbacks. The P/E is useful as a starting […]
What Buybacks King, Henry Singleton, Can Teach Us About Capital Allocation
Before Warren Buffett and his special conglomerate, the compounding machine Berkshire Hathaway, there was a CEO of Teledyne called Henry Singleton—who pioneered prudent capital allocation inside of a conglomerate with stock buybacks and issuance. Henry Singleton was profiled in the excellent book, The Outsiders: Eight Unconventional CEOs and Their Radically Rational Blueprint for Success. In […]
IFB182: OTC Stock Basics; The Best Free Tool for Stock Market Data
Welcome to the Investing for Beginners Podcast. In today’s show we discuss the basics of OTC (over the counter) stocks and the best free tool for stock market data. Buying and selling OTC stocks is not the same as investing in known entities, and understanding how that world works is the key to success. Check […]
The Simplest Explanation of Backlog Accounting: A Home Buying Contract
I find that backlog accounting is best explained by the home builder industry. A backlog represents work that needs to be performed but has not been recognized as revenue yet. As an example, a customer who is approved for a mortgage on a new home goes into a home builder’s backlog. Once that transaction closes, […]
Other Comprehensive Income, OCI, AOCI: The Basics, with 10-K Examples
Edited for clarity: 9/21/22 As a company creates income, this changes its shareholder’s equity. Add investment securities and it can get hairy. The Statement of Comprehensive Income attempts to capture the effect of unrealized gains on investment securities. It reports these changes to shareholder’s equity through the balance sheet, through OCI and AOCI. OCI stands […]
Corporate Restructuring Basics: How Taxes and Politics Play a HUGE Role
History provides a valuable guide and lessons to finance, and the history of corporate restructuring is no exception. In particular, the Merger mania in the 1980’s provides a prime example of what can happen on Wall Street as companies struggle to survive and thrive in an ever-changing environment. While textbooks can provide fantastic explanations about […]
Valuation Basics: Market vs Book Value – and The Argument for Both
When performing a DCF valuation, you must make a distinction between using market vs book value for debt. It is a critical part of calculating the weighted average cost of capital (WACC). The easy way, of course, is to just use book value of debt from the company’s balance sheet and be done with it. […]
