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feynmanresearch

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    EV/EBIT:The most underrated price ratio

    in General Discussion

    Posted

    I have a question about that. Why are all the modern ratios using income statement type metrics when what they are really trying to measure cash flow. Why not just use something from the cash flow statement like for instance operating cash flow?

     

    Hmm,I do not know the exact answer to that question, but a reasonable assumption would be that most investors are being taught income metrics at school, and a lot of value investors have read countless books who have touted the effectiveness of such metrics.In a sense, once you go past a certain point in time, concepts like the effectiveness of income type metrics become the standard for investors to use, almost reflexively and without much afterthought. Similar to how efficient market theory had and still has many adherents, despite being hogwash.It's like that saying"say it loud enough and often,and people will believe it to be the truth".

     

    That's my $0.02.Would love to hear your take on it.

    New Essay: Price and Returns

    in General Discussion

    Posted

    OT?

     

    For me I like to think of high ROE as a measure of a business with a moat.

     

    I've seen others think this way and I have thought this way in the past, but no longer do.

     

    Why is high ROE a measure of a business with a moat?

     

    If you insist, what is the moat of, for example, COH? (I can post probably over 100 companies with >15% historical ROE that have pretty much no moat).

     

    Or are you saying that business with a moat should have high ROE? But that's not necessarily true either. BRK never had high ROE.

    Wouldn't ROC be a better measure?

    Introduction

    in General Discussion

    Posted

    Welcome to the forum,

     

    We share a similar background, although I didn't master in forensic accounting. Do you think learning about forensic accounting has sharpened you as an investor, in regards to detecting BS games management is trying to play?

    King Icahn

    in Books

    Posted

    Listened to this one to and from work. It's pretty good but a bit long-winded IMO.

     

    The main thing I learned was you can accelerate the return on your capital by being the catalyst. And that after a while, your reputation proceeds you and creates a virtuous circle.

    It's also heavy on intimidation based negotiation tactics.

     

    Absolutely.When a smile doesn't work, intimidation comes into play!

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