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To: Perspective who wrote (112516)	7/13/2001 11:24:07 AM
From: Ken98	Respond to of 436258

<<Leaving aside tax factors, the formula we use for evaluating stocks and businesses is identical. Indeed, the formula for valuing all assets that are purchased for financial gain has been unchanged since it was first laid out by a very smart man in about 600 B.C. (though he wasn’t smart enough to know it was 600 B.C.). The oracle was Aesop and his enduring, though somewhat incomplete, investment insight was "a bird in the hand is worth two in the bush." To flesh out this principle, you must answer only three questions. How certain are you that there are indeed birds in the bush? When will they emerge and how many will there be? What is the risk-free interest rate (which we consider to be the yield on long-term U.S. bonds)? If you can answer these three questions, you will know the maximum value of the bush and the maximum number of the birds you now possess that should be offered for it. And, of course, don’t literally think birds. Think dollars. Aesop’s investment axiom, thus expanded and converted into dollars, is immutable. It applies to outlays for farms, oil royalties, bonds, stocks, lottery tickets, and manufacturing plants. And neither the advent of the steam engine, the harnessing of electricity nor the creation of the automobile changed the formula one iota nor will the Internet. Just insert the correct numbers, and you can rank the attractiveness of all possible uses of capital throughout the universe.>> berkshirehathaway.com

To: Perspective who wrote (112516)	7/13/2001 4:40:15 PM
From: patron_anejo_por_favor	Read Replies (1) \| Respond to of 436258

BC...that approach is reasonable when looking for value. I usually look at BV minus paid in capital which also removed the effects of depreciation (probably not a big issue for most tech cos but very meaningful when attempting to evaluate manufacturers with large capital equipment expenses, etc).

To: Perspective who wrote (112516)	7/13/2001 5:03:34 PM
From: Earlie	Read Replies (1) \| Respond to of 436258

BC: I see others have already commented, but for me, the value of balance sheet analysis is that so few folk do it and it is the place where the lies are most easily detected. Not trying to suggest that it is easy, but it sure does provide a decent view of the soft underbelly of many companies. At this end, we are most interested in the trends that show up. Is the debt increasing (and does the reported debt jibe with other known facts?..... "off-balance sheet" stuff is not easily sniffed out). Goodwill, "other investments", capitalized expences rising? Receivables increasing? We also find it best to read the fine print in the 10-Qs as the balance sheet is perused. Am,azing things come to light when this is done. (g) Best, earlie

To: Perspective who wrote (112516)	7/13/2001 5:07:04 PM
From: Earlie	Respond to of 436258

BC: I see others have already commented, but for me, the value of balance sheet analysis is that so few folk do it and it is the place where the lies are most easily detected. Not trying to suggest that it is easy, but it sure does provide a decent view of the soft underbelly of many companies. At this end, we are most interested in the trends that show up. Is the debt increasing (and does the reported debt jibe with other known facts?..... "off-balance sheet" stuff is not easily sniffed out). Goodwill, "other investments", capitalized expences rising? Receivables increasing? We also find it best to read the fine print in the 10-Qs as the balance sheet is perused (for example, stock can be issued in many ways). The balance sheet alone isn't nearly as valuable as the combination. Amazing things come to light when this is done. (g) More on this topic later. Best, Earlie