(Why do I feel like I'm writing test answers in a blue book?)
Ha,ha -- touche! Sorry about that, Chuzzlewit. I've spent too many years as a reporter, trying to nail down interviewees who prefer to mouth useless generalities. It has spilled over into everything else (sort of an occupational disorder).
Thanks for your thoughts on the different ways in which "debt" can be figured in different industries -- maybe I can buy some Ford stock after all! However, I must protest against your introduction to those thoughts, namely:
Your response in point #1 underscores the need for doing your own research.
No, it doesn't. I have said repeatedly that I use pre-set criteria (like debt/equity, free cash flow, projected p/e, etc., etc.) -- and in full knowledge of their real & potential weaknesses -- only to run searches in order to obtain a manageable list of investment candidates. After that, I try to do my own research on the companies on that list, trying to balance all the pros and cons. (And I think you would approve of most of my long-term investment picks.)
But my response did perhaps, underscore something else altogether, namely: the need for investors to have a professional background in financial analysis and/or accounting.
The fact of the matter is, that I will never be able to handle all this fancy balance sheet stuff like the pros. That, incidentally, is why I am tempted to liquidate all my stocks and put the money into mutual funds and country funds (where 50% of my money is already). Let the pros handle it -- that's their job.
On the other hand, when you buy a mutual fund you are essentially buying a pig in a poke.
Or you can go the TA way or the momentum way: Fundamentals be damned! Is the stock going up or isn't it? That's the only question that matters as far as my own bank account is concerned!
And I dare say these mo-mo folks don't do any worse than purist fundamentalists (or fundamentalist purists, whatever).
jbe
P.S. I don't care to rely on Value Line because their rating system is "proprietary." That's only another kind of pig in a poke. I like to know what I am getting, and why.
P.P.S. Re earlier search for companies with low price/cash flow ratios and low debt/equity ratios (from 0.0 to .30): if you raise the debt/equity limit just a notch to .31, you get ESV (one of my favorites, as well as one of yours) among the top 25! |
