SI
SI
discoversearch

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor.  We ask that you disable ad blocking while on Silicon Investor in the best interests of our community.  If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.
Strategies & Market Trends : Value Investing
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  
To: bruwin who wrote (58568)11/29/2016 6:10:43 PM
From: Graham Osborn  Read Replies (1) of 78802
 
The concept of an equity-bond is that both the principal (the "equity") and the coupon (the "earnings") should expand. When Buffett bought KO in the late 80s the company was doing precisely that thanks to a refocus on its core brand and ROW expansion. Now the only thing consistently expanding is their LT debt, while both book/ tbook and earnings decline/ stagnate. Not a stock Buffett would buy now.

Your use of high-grade corporate bond rates for equities is highly dangerous. There are only a handful of stocks on the planet that have such impenetrable moats that their book value can be considered as safe as high-grade corporate bond principal. Not only that, but did you consider that high-grade corporate yields may be illogically low right now? If you stake your valuations on such a measure, you are accepting that your valuation is highly susceptible to interest rates. Buffett did not stake his investments on a prediction about interest rates, and neither should you.
Report TOU ViolationShare This Post
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  

HomeMailHotSubjectMarksPeopleMarksKeepersSettings
Terms Of UseContact UsCopyright/IP PolicyPrivacy PolicyAbout UsFAQAdvertise on SI
© 2025 Knight Sac Media.  Data provided by Twelve Data, Alpha Vantage, and CityFALCON News