A Quote by Warren Buffett
Calculate "owner earnings" to get a true reflection of value.
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Calculate a stock's price/earnings ratio yourself, using Graham's formula of current price divided by average earnings over the past three years.
One of the big problems with growth investing is that we can't estimate earnings very well. I really want to buy growth at value prices. I always look at trailing earnings when I judge stocks.
They get, you know, whatever they want from their earnings, and their earnings go into their own company.
Most look at earnings and earnings potential, well I can't get into that game.
But when a black player calls a white owner a slave master that's dangerous. It's one thing to say an owner is a good owner or a bad owner, but you have to be careful when you bring race into it.
Being captive to quarterly earnings isn't consistent with long-term value creation. This pressure and the short term focus of equity markets make it difficult for a public company to invest for long-term success, and tend to force company leaders to sacrifice long-term results to protect current earnings.
The basic concept of value to a private owner and being motivated when you're buying and selling securities by reference to intrinsic value instead of price momentum - I don't think that will ever be outdated.
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 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.
Football is a sport of paradox. It requires reaction, not reflection. Yet you must use your mind to calculate, to anticipate - to think and not think at the same time.
For the most part, earnings and market value growth are a result of reduced expenses.
A Land Valuation Tax is a levy on the value of the land unimproved by buildings or other enhancement. The method is already used by insurance companies each year when they calculate your home insurance premium - they separate the cost of a total rebuild of the property from the value of the land itself.
I never calculate. That is why those who do, calculate so much less accurately than I.
When you go public, the value equation of your company changes immediately. It is valued on anticipated earnings.
I think that we have to be constantly asking ourselves, 'How do we calculate the risk?' And sometimes we don't calculate it correctly; we either overstate it or understate it.
If I were to describe myself as any particular type of owner, it would be a fans' owner because you really get great satisfaction when you can go out on the streets and scream you're No. 1 and you're world champions.
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