exchange2000.com this should be bullish for IECS if their plans come to fruition and if hedge funds are right..
also read the below and if IECS also becomes successful in franchising
this also could be incredibly bullish
So much possible potential..if if if and more ifs
Talk : Gold/Mining : Gold Price Monitor
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To: Bobby Yellin (17817 )
From: Alex
Monday, Sep 7 1998 1:14AM ET
Reply # of 17951
Hi Bobby. Hope you find this of interest. We've all read similar info before I'm sure, but
it's always good to refresh oneself every now and again.................
How Warren Buffett turned $100 into tens of billions
HERE are the investment principles of Warren Buffett, who turned an initial $100 into a
personal fortune of tens of billions of dollars.
Following them consistently could make you rich, too.
Only invest in businesses you understand
Buffett concentrates on learning all he can about a company he is considering investing
in.
He has never owned shares in a technology company because he says he wouldn't be
able to understand it well enough to make an informed judgment.
All investors can, over time, obtain and intensify their "circle of competence" in an
industry they are professionally involved in, or in some sector of business they enjoy
researching.
Don't buy a share - buy a business
Most investors spend far too much time watching and anticipating share price changes
and far too little understanding the business they partly own.
Insist on a consistent operating history. You should be assured the company has been in
business long enough to show it can earn significant profits over time.
A new company cannot have experienced different economic cycles and competitive
forces.
However, a company can have an interrupted period of profitability and still have a
consistent operating history.
Often this gives you a one-time opportunity to buy into a good business at a low price.
Seek out businesses with favourable long-term prospects.
The best business to invest in is one with a 'franchise'
By this Buffett means a company which is providing a product or service that is needed
or desired, has no close substitute, and is not either constrained or protected by official
regulation.
A company with such a franchise can regularly increase its prices without fear of losing
market share, even when demand is flat, enabling it to earn above-average returns.
Few companies have franchises. Most are "commodity businesses" without pricing
power because their products are virtually indistinguishable from others, and are rarely
worth investing in.
"Commodity" isn't used by Buffett just in its normal sense of oil, copper or orange juice.
"Today computers, automobiles, airline service, banking and insurance have become
commodity-type products," he says.
"Despite mammoth advertising budgets, they are unable to achieve meaningful product
differentiation."
"Commodity businesses" generally give poor returns and are "prime candidates for profit
trouble" as they can only compete on the basis of price, slashing profit margins when
demand softens.
Franchise-type businesses can survive inept management; commodity-type businesses
cannot.
The only commodity-type company worth considering is one that is clearly the
lowest-cost producer in the industry.
Look for 'economic goodwill'
This is the intrinsic value stemming from a company's reputation for its products and
services. It enables it to continue charging premium prices and achieve above-average
return on capital.
Demand independent, rational and open management
The "institutional imperative" impels managers to imitate, lemming-like, what other
managers are doing, no matter how irrational.
One measure of management competence is how well they are able to think for
themselves.
Watch out for how management reinvests your cash
Are the projects earning at rates higher than the cost of capital, or would they do better
to return the money to shareholders?
Remember that most annual reports are a sham. The only worthwhile ones are those of
companies where the managers admit their mistakes.
Avoid companies undergoing radical change: "Severe change and exceptional returns
usually don't mix" and so-called "turnaround" situations seldom turn around.
It's more profitable to buy a stake in good businesses at reasonable prices than in
difficult businesses at cheaper prices.
The best returns are achieved by companies that have been producing the same product
or service for several years.
Avoid predators
Be wary of companies that seek to grow through acquisition, as such growth often
comes at excessively high prices.
Also, a company that must integrate and manage a new business is apt to make
mistakes that could be costly to shareholders.
Focus on return on equity, not earnings per share
As companies continually add to their capital base by retaining a portion of their
previous year's earnings, growth in earnings, which automatically increases earnings per
share, is really meaningless.
A truer measure of annual performance, because it takes into consideration the
company's ever-growing capital base, is return on equity - the ratio of operating
earnings to shareholders' equity.
However, this figure should be reached after making certain adjustments. Marketable
securities should be valued at cost, not market value.
Exclude capital gains or losses, as well as any extraordinary items that may increase or
decrease operating earnings.
And be wary of high debt ratios.
Martin Spring is editor of Personal Finance newsletter |
