Banks’ reported returns on tangible common equity are a con game

JPMorgan Chase reported strong results in the fourth quarter as we earned $11.0 billion in net income…and an ROTCE of 20%
JPMorgan Chase reported strong results in the fourth quarter as we earned $11.0 billion in net income…and an ROTCE of 20%
Something that knocks the pins out from our normal understanding of price earnings ratios, return on invested capital, discounted cash flow analysis, smart beta/factor ETFs, value at risk models (VAR) and even company financial statements
Sunkenness – intangible investments tend to be worth less if they go wrong
Among other factors, indicators of extremes of euphoria seem much more important than price
Despite this problem, we consider the owner earnings figure, not the GAAP figure, to be the relevant item for valuation purposes
CAPE is ignorant of interest rates
The first step for investors is to come to a new understanding of reported earnings and the book value of equity.
Using trailing twelve months earnings that are impacted by a recession is a mistake
If a company’s capital expenditures are simply maintaining the company’s position in its markets, it free cash flow may be unduly high
About forty years ago Buffett experienced a Damascene conversion
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