Interactive thread on investment-related questions

[Southie]

Re: Interactive thread on investment-related questions

@arshad5

I think that you have a different approach than me. It seems that you look at companies from the view of an accountant whereas I view them from the point of view of an investor. Also I think for you liabilities as share of total assets is quite important whereas for me it is something to consider but it is not the overriding concern.

I am a lot more flexible in my approach. Sometimes growth is important for me, sometimes yield is important for me, and sometimes security is important for me, sometimes I speculate and take high risks. The goal at end of the day should be to achieve high rate of return on your investment consistently while minimisng the risks. This can be done with buying just one stock but usually you need to have a well balanced portfolio.

I don’t make the distinction between viewing a stock from accountants perspective and investors perspective. I look at Income, Cash flow and balance sheet. All 3 are almost equally important. The valuation should be fair to cheap ( income statement), the quality of earnings should be sound (OCF > net income), FCF should be good ( last 2 from cash flow statement), and balance sheet should be rock solid (cash - debt preferably > 0 debt/ eq < 0.3 cash flow sufficient to wipe out net debt. No room for flexibility here.

I don’t differentiate between growth vs value. The growth stocks of yesteryears are value stocks of today. Picked up Intel at 52 wi low today at 21.9. The price you pay matters. As for security I don’t apply std definition - that volatility = risk. To me risky stocks are those for which you overpay have poor earnings quality and high debt to equity.