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

To: TimbaBear who wrote (11770)	1/10/2001 1:04:35 PM
From: Paul Senior	Read Replies (3) \| Respond to of 78471

Regarding cash flow. Hows, Whats, and my favorite, Why. TimbaBear, you will likely get replies of a methodological or analytical nature in regards your inquires about cash flows. Certainly that's what one could expect from a value thread. I offer: for getting company information from SEC filings, I prefer 10kwizard.com for detailed discussion, I prefer the thread entitled, "Free Cash Flow as a Value Criterion" Subject 17762 The bigger issue though is why make such a detailed evaluation and study of cash flow? If one says it is part of a desire to learn and/or will make an investor more knowledgeable, more, informed, better balanced - that I certainly understand. However, my opinion is that it's likely not a fruitful pursuit if the objective is "coming up with a usable formula for converting the CFO into a valuation tool." You will see on the SI cash flow thread what you already know - that people have different ideas as to the components and relative importance of those components of cash flow. You will also notice that the thread is moribund. The reason is not because no agreements could be reached about cash flow analysis, but, imo, because there could be no translation from accounting discussion to application. That is, you will see few or no stocks discussed as "good buys" because of their cash flows. Nobody there (as I recall) admitted to making money from picking stocks by using cash flow analyses as a prime selection (valuation) tool. You have already also seen that Ben Graham does not even discuss cash flow in "The Intelligent Investor". Although people attribute some or much success of Warren Buffett to his cash flow studies, there's also been reports that Charlie Munger has said he's never seen Mr. Buffett actually do a cash flow analysis. TimbaBear, your post reads to me like you are attempting to find the Holy Grail as you drill down into the depths of the how to's, assumptions, relationships, and relevance of cash flow. What I'm saying is that I just don't believe all that is so necessary or important in making an investment decision.