Pearl or Moat?
Imagine you found a pearl – a stock that is priced at 50 but you think is worth 100. Assuming value is normally distributed around 100, with standard deviation σ=20, you think there is an 89%...
View ArticleRule no. 1
Rule no. 1: Never Lose Money is the Blackstone Principle of Intelligent Investing. Following Ben Graham’s timeless guidance, the best way to observe the rule is to abide by the Central Concept of...
View ArticleA Calibrated Investor
Dylan Evans’s Risk Intelligence test has 50 general knowledge statements, half true and half false. Participants are required to give the probability that a statement is true. So if they are certain...
View ArticleBy the way
By the way, Meyer Burger was a pearl: The company had a 3 for 4 rights issue at 4.2 Swiss Francs at the end of April last year. Corrected for that, the price at 28 January 2013 – the date of my Knife...
View ArticleInvert, always invert – The video
I posted a new video on YouTube, where I discuss the Prior Indifference Fallacy in the context of investing. I show why avoiding it can give an investor a critical advantage, provided that he follows...
View ArticleThe ship and the sea
“Security analysis cannot presume to lay down general rules as to the “proper value” of any given common stock. Practically speaking, there is no such thing”. I hadn’t yet read Ben Graham when, many...
View ArticleA strong message
As we have seen, no matter how many years of a company’s earnings we valiantly endeavour to forecast, most of our valuation resides in the terminal value. After all, what are 5, 10 or even 20 years for...
View ArticleA moat question
In a one-period valuation model the company grows at a constant rate, now and forever, and its Franchise Value – if it has one – is based on a constant and permanent spread between its return on equity...
View ArticleEeek
In discussing one of the main themes in this blog – Intelligent Investing – I have chosen to focus on concepts and methods rather than present specific investment cases. Exceptions have been Meyer...
View ArticleGrahamian Investing
My post on Value was inspired by Aswath Damodaran’s three posts on Value Investing. Like many, I am a regular reader of Professor Damodaran’s blog. I find his posts interesting, sharp and...
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