Interactive thread on investment-related questions

[arshad5]

Re: Interactive thread on investment-related questions

@Southie

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.

If you just look at things like P/L, Balance Sheet and Cashflow then that is a very narrow way of looking at the company. I also look at these things but also look at the broader picture e.g the management, the industry, competitors, the macro economy, stage of the cycle, intrinsic value, growth potential, trends. To achieve superior results you have to have superior knowledge or superior insight. Also when to buy is the key. You also need to buy a stock that you would be happy to own for the long term, and then after purchasing you just need to imagine that the market has closed down for 10 years.