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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: cfimx who wrote (8879)	11/4/1999 1:05:00 AM
From: James Clarke	Respond to of 78625

I am learning how "you know who" does that calculation in his head. My model is about 30 cells on a spreadsheet with four inputs. The more times I plug companies into that model the more I don't need the model. After a while, you know what the answer is going to be. It takes 30 seconds for me to value a certain type of company with one critically important caveat, which takes all the laziness out of this game. The calculation should be trivial to anybody who knows finance - the groundwork is laid out clearly in the book "Buffetology". But here's the caveat, which is the entire game: - the company must be the type that fits the model, and there are very few that do. It might take 30 hours - to really do it right it takes years of following the company, which I usually don't have but "you know who" does - to understand the company enough to have enough confidence in the integrity of those four inputs to put your money on the table. And nine out of ten companies you would follow for years and conclude that the DON'T fit the model. Otherwise its garbage in, garbage out. The value added is the research behind that trivial calculation, and that homework is not at all trivial.