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Strategies & Market Trends : Graham and Doddsville -- Value Investing In The New Era -- Ignore unavailable to you. Want to Upgrade?

To: porcupine --''''> who wrote (933)	11/1/1998 12:13:00 PM
From: Freedom Fighter	Read Replies (4) \| Respond to of 1722

Reynolds, This is something I posted at the Value Investing thread. >>Again, he will COMPLETELY disregard the amortization charges because they don't effect his CASH return on investment. You should do the same. If you want more conviction about it, take a look at the Berkshire Hathaway Owners Manual published on the WEB site. It will say the same thing.<< That is the way I handle it and for exactly the reasons you describe. To be honest, some of these accounting and valuation issues can get extremely complex. After 2 years of trying to persuade Reynolds Russell of GADR that you should crunch numbers to death, I am starting to come around to his point of view. Absent any extremes, there are advantages to simplicity. If you build in some margin of safety, calculating the number of years that goodwill should really be amortized at (and other such things) buys you very little except less time. If it's that close, maybe you shouldn't make the investment. There seems to be numerous flaws/questionable rules in GAAP accounting and maybe we're better off just insisting on margin of safety. Wayne Crimi Value Investor Workshop members.aol.com