CrazyPete, I was giving some thought to our recent debate and the "firm stand" that each of us took. It seems to me that it’s not a case of who is right and who is wrong, but rather a case of how each of us may be viewing the financials of a company from our own investment standpoint and criteria requirement.
I suspect that you’ve done a lot of homework studying the Financial Statements of a company such as GE and have come to the conclusion, quite correctly, that the company is making money based on the business model it has adopted. If it wasn’t, then its Bottom Line would be negative.
You may also believe that the company is doing as well as can be expected, within its business model, and you are therefore prepared to remain a shareholder.
If I was asked to "define" your approach, with regard to GE, I would say that it was not dissimilar to a view taken ‘FROM WITHIN’ the company, such as what the Directors and CEO, would very likely have.
However, my approach could probably be described as a "dispassionate" investor looking at a company, such as GE, ‘FROM OUTSIDE’ the company. I’m looking for companies to invest in whose business models and financial results indicate that those companies have adopted the best modus operandi, based on their areas of expertise, and in addition to that are making excellent profits and providing excellent value for shareholders, both in terms of Capital Gain and, where possible, Dividend Income.
In this regard, I measure any company up against, what could probably best be described, as a "Template of Excellence", consisting of several target percentage ratios obtained from within its Income Statement and Balance Sheet. A company that doesn’t, simultaneously, meet, or exceed, those requirements doesn’t pass 1st. base.
As a result, several stock screens that I use, based on this principle, will only spit out between, say, 20 or 40 companies from the over 8000 Industrial type companies on the NYSE, AMEX and NASDAQ. Further "pruning" is always necessary because screen web sites don’t always have the exact criteria one is looking for, so one has to "compromise" somewhat !
Anyway, what really matters at the end of the day is that we all make a healthy return on our investments, utilising whatever method(s) suits us best. |
