A Quote by James B. Stewart
When it comes to valuation, there's only one thing stock investors really care about, which is earnings.
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If you can follow only one bit of data, follow the earnings - assuming the company in question has earnings. I subscribe to the crusty notion that sooner or later earnings make or break an investment in equities. What the stock price does today, tomorrow, or next week is only a distraction.
When high-growth companies slow down, growth and momentum junkies often sell indiscriminately, which can create great opportunities for value investors. Just be careful not to anchor on the stock's previous price or earnings multiple, which are no longer relevant.
Stock prices are likely to be among the prices that are relatively vulnerable to purely social movements because there is no accepted theory by which to understand the worth of stocks....investors have no model or at best a very incomplete model of behavior of prices, dividend, or earnings, of speculative assets.
Investors have been too willing to buy stocks with strong reported earnings, even if they do not understand how the earnings are produced.
Stock prices aren't real things. They're just froth on a wave. The wave is the only real thing, which investors forget when they're watching the ticket slither by.
The big picture is: the main thing you should be concerned about in the future are incremental returns on capital going forward. As it turns out, past history of a good return on capital is a good proxy for this but obviously not foolproof. I think this is an area where thoughtful analysis can add value to any simple ranking/screening strategy such as the magic formula. When doing in depth analysis of companies, I care very much about long term earnings power, not necessarily so much about the volatility of that earnings power but about my certainty of "normal" earnings power over time.
If you have information that a company is not as good as its stock market valuation, you don't have a way to sell that stock unless you already own it. And so that information doesn't get incorporated in the company's stock price as fast if you don't allow short selling.
[Betsy DeVos] does care about charter schools, which are public schools. She does care about choice, which is a perfectly legitimate thing to care about. It's because it's the one issue where the Democratic donor base was really energized, which was the teacher unions.
The key is if the economic data stays soft, maybe we don't have to worry much about interest rates anymore. Then we need to worry about earnings. What gave us a really strong move in stock prices from late May until about two weeks ago was this heightened optimism that maybe interest rates are at that high. That gave you a relief rally. Now reality is setting in - if we've seen the worst on interest rates then we've seen the best on earnings.
The only thing I know is that no one ever sat in a therapist's or a psychiatrist's room saying, 'My parents just loved me too much.' The only thing you can do is love them and be around. Kids don't really care what your car is like or how big their house is. All they really care about is that you are around.
When the only people in mainstream discourse who care about the working class are Wall Street investors, it really is time to ask where our politics went wrong.
Calculate a stock's price/earnings ratio yourself, using Graham's formula of current price divided by average earnings over the past three years.
The ideal form of common stock analysis leads to a valuation of the issue which can be compared with the current price to determine whether or not the security is an attractive purchase.
When companies are private, founders can share more about their future dreams with investors; report less; and the shares are illiquid, constraining short-term changes in valuation.
The only thing I ever really care about is animals - animal causes. I don't really care about people that much, but animals I feel like they always need to be protected.
What we do is we test what works on Wall Street. And sometimes it is earnings momentum, and sometimes it's earnings surprises. Sometimes it's price-to-sales cash flow, and then we put together our stock selection models.
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