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

To: E_K_S who wrote (57996)	9/15/2016 12:25:03 PM
From: bruwin	Respond to of 78748

OT. Yes, when it comes to looking at a company's Assets it certainly doesn't help the "calculation" when there is a "Chinese factor" involved. But apart from all that, it's still a case of whether or not the Assets are actually worth what they are stated to be worth on the Balance Sheet. And that one will only really know when the acid test applies and the company is liquidated and the company, or its liquidators, go out there and sell them off. You also have a copy of "Warren Buffett and the Interpretation of Financial Statements". Now you tell me, based on the well researched content of that book, how strategic to Buffett's determination of a company with Durable Competitive Advantage this scrutiny of a company's Book Value is ? After working for Ben Graham for quite a while, Buffett came to the conclusion that Graham's 'Value Analysis' wasn't always cutting it. Buying shares when they were well below book value wasn't a shoe in that that company's share price would move up to that book value per share number. In quite a few cases those share prices just kept going lower until, in some instances, the companies went bankrupt. As a result of that hands-on experience that Buffett gained, he turned his mind to a different method of company analysis, based, primarily on several target ratio components that he obtained, primarily, from the Income Statement. He was looking for ongoing, positive, profit accumulation of a company where there was the maximum amount of Top Line gross Revenue ending up at the company's Bottom Line, from where it would enrich the Balance Sheet. And by requiring that all, or at least a major number of his target ratios are simultaneously met, he can conclude that the company is well on the road to profit making. Not that often that when a company simultaneously meets or exceeds those target ratios that it's doing badly as a business. Which is probably why his holding company's A-shares are now at $219 810 each, compared to about $95 000 ten years ago. It's all very well for one to look at a company's 'wonder product' or latest 'research breakthrough' and make bets or speculations as to how that's going to boost profits, going forward. And, Yes, sometimes that may happen. But equally it may not. Who knows what a competitor may have up their sleeves which could burst another company's "bubble" when the time comes ? At the end of the day I'd say that one wants to see financial confirmation that the 'wonder product' or 'research breakthrough' actually does "cut the mustard". And that can only really and realistically be determined from those sort of relevant numbers that the most successful stock market investor, ever, scrutinizes and bases his decisions on .... IMO.