About forty years ago Buffett experienced a Damascene conversion
As the play, The Merchant of Venice, unfolds, all of Antonio’s ships sink, his business collapses and Shylock demands his pound of flesh.
Even with overly optimistic earnings estimates companies regularly ‘beat’ the estimates. What gives?
Investing based essentially on the business cycle outlook is a fools’ game.
Worldly wisdom teaches that it is better for reputation to fail conventionally than to succeed unconventionally
We are going to want to get a significantly higher return, obviously — in terms of cash produced relative to the amount we’re outlaying now — for a business than we are from a government bond. That has to be the yardstick at a base.
Opinions of fair value based on DCF calculations are necessarily inexact (rightly vague?). But, at least they at least ask the right question.
Since analysts’ reports are so important in our work of identifying and studying companies to invest in, we need to look at the strengths and weaknesses of these reports.
Price earnings ratios are a frail and shifting basis for determining fair value. They do not force investors to think through all the factors that go into a deep assessment of fair value.
These charts tend to exaggerate recent prices and understate older prices. As the time period increases the distortions of the chart increase.