The blog
Understanding value investing, without the needless jargon.
The Dividend Trap: When a High Yield Is a Danger Signal
A generous dividend catches the eye and feels safe. But a yield that climbs often hides a price that is collapsing, and a dividend too heavy to carry ends up cut. Here is how to spot the trap.
Read →Intrinsic Value from Cash Flows: Understanding DCF (and Distrusting Its Precision)
A company is worth the cash it will produce, brought back to today. That is the whole idea of a DCF. Here is how it works, where most of the value hides, and why its precision is an illusion.
Read →Net-Net Stocks (NCAV): Graham's Deep-Value Bargain, Calculated
Buy a business for less than its cash and inventory net of every debt, and get the factories, the brand, and the profits for nothing. That is the net-net, Benjamin Graham's most extreme bargain. Here is how to find one, and why so few survive contact.
Read →Free Cash Flow Yield: Valuing a Company by Its Cash, Not Its Accounting Profit
Earnings are an opinion; cash is a fact. Free cash flow yield asks the plainest question in valuation, how much real cash a business throws off for every dollar you pay. Here is how to compute it, and where it misleads.
Read →The Economic Moat: What Actually Protects a Company's Profitability
A highly profitable company attracts competition, which erodes that profitability, unless something protects it. That something has a name: the moat. Here are its five forms, and how it reads in the numbers.
Read →Joel Greenblatt's Magic Formula: The Recipe, the Math, and the Blind Spots
Two rankings, one sum, and a list of stocks to buy. Joel Greenblatt's Magic Formula fits on a postcard. Here is how it actually works, and what it cannot see.
Read →Return on Invested Capital (ROIC): The Single Best Measure of Business Quality
One ratio answers the question Warren Buffett cares about most: does this business turn a dollar of capital into many, or into few? Return on invested capital is that ratio — and its durability is the whole game.
Read →The Altman Z-Score: Predicting Bankruptcy From Five Ratios (With a Worked Example)
In 1968, a young finance professor asked whether five numbers from a balance sheet could predict a bankruptcy two years out. They could — and the formula still runs today.
Read →The Piotroski F-Score: A 9-Point Test of Financial Strength (With a Worked Example)
A Chicago accounting professor asked a simple question: among cheap stocks, can the financial statements alone tell the survivors from the sinking? His answer was nine yes-or-no tests, one point each.
Read →Reading a Balance Sheet Like an Investor: The Seven Lines That Decide
A balance sheet runs to hundreds of lines. Seven are enough to tell whether a company can survive a bad year — and to avoid most of the avoidable accidents.
Read →P/E vs EV/EBIT: Why Two Stocks at the Same P/E Are Not the Same Price
The P/E ratio ignores debt and cash. Two companies trading at 12 times earnings can cost, in practice, twice as much one as the other.
Read →Margin of Safety: What It Actually Protects You From
Three words everyone quotes and almost nobody puts a number on. A margin of safety does not protect the company — it protects you from your own estimate.
Read →Value Traps: Seven Signs a Cheap Stock Is a Trap
Not every discounted stock is an opportunity. Some are cheap because they deserve to be — and will stay that way. Here is how to spot them before you buy.
Read →Value Investing: The Complete Guide (Graham, Buffett, and What Changed Since)
Buying a dollar for fifty cents — the phrase is famous, the method less so. Here is how it actually works, what it demands, and why the original version is no longer enough.
Read →The Graham Number: Formula, Worked Example and Real Limitations
One square root, two balance-sheet figures, and a ceiling price. The Graham Number is the simplest valuation benchmark there is — provided you know what it does not measure.
Read →How to Read the Track Record of an Investment Method (and Why We Don't Publish One)
Three biases, four numbers and one test separate a record that proves something from one that merely sells. Applied honestly, that standard rules out our own — which is why there is none on this site.
Read →The value investing letter
One email, no noise: the method, the ideas behind the rankings, and what we are reading. Free, and you can leave in one click.
We use your address only to send the letter. No sharing, unsubscribe anytime.