The Curriculum

Learn to separate two numbers everyone confuses: what the market quotes at any given moment, and what a business is worth economically. By the end of this module, a stock price will never again tell you something it cannot tell you.

• — A Share Is a Piece of a Business
• — Market Cap, Enterprise Value, Intrinsic Value
• — Mr. Market, and What a Price Does Not Tell You

Open an annual report without getting lost: know where to look in the balance sheet, the income statement, and the cash flow statement, and what you're really searching for.

• — The balance sheet: what you own, what you owe, what's left
• — The income statement: the waterfall, and its illusions
• — Cash flow: what the bank actually saw

Three mistakes cost the beginner more than all the others combined: mistaking cheap for a bargain, buying a story instead of a business, and taking a high yield for a windfall. By the end of this module, you'll recognize each one by observable signals — and tell an investment decision apart from a bet.

• — "Cheap" Is Not "a Bargain"
• — Buying a Story Instead of a Business
• — The yield trap, and averaging down without a thesis

The club displays two scores out of ten, never merged into one: Health, which asks whether the business can hold up, and Value, which asks whether the stock is cheap. This module explains what each one measures, why soundness is read in the balance sheet rather than in volatility, why a low price is not a bargain without Health, and how to read the two rankings, Avoid and Shortlist, plus the portfolio that completes them. Backed by case studies, on real names.

• — Two Questions, Kept Separate
• — Health: Can It Hold Up?
• — Value: Is It Cheap?
• — Two Rankings, and a Pillar
• — Case Studies: What the Two-Score Reading Revealed

A discount is not a low price. It's the gap between a quoted price and a value estimated by a named method. Learn to estimate that value from assets, from multiples, and from cash flows, to compute a discount without picking the wrong denominator — and to see exactly what a discount percentage will never tell you.

• — What We Mean by a Discount
• — Value from assets: net asset value, NCAV, the Graham Number
• — Comparing Multiples, and the Logic of Cash Flows
• — Why the Methods Disagree, and What a Discount Leaves Out

Benjamin Graham's central idea, taken apart and rebuilt: why value can only be estimated as a range, how to put a number on the safety gap you demand, what it actually absorbs — and the many situations where a wide discount protects you from nothing.

• — A value is only ever known as a range
• — Expressing and Calibrating the Margin of Safety
• — The Mathematics of Loss Are Asymmetric
• — What a Margin of Safety Does Not Protect

A cheap stock can hide a mediocre business. Learn to read profitability, margins, leverage, and the consistency of earnings to tell what is cheap from what is cheap for good reason — and to know when quality is worth paying up for.

• — Return on Equity and Its Illusions
• — Operating Margin and the Power to Set Prices
• — What the Balance Sheet Can Bear: Debt and Coverage
• — Earnings Stability, and What Quality Is Worth Paying For

A stock can be cheap because it deserves to be. This module teaches you to recognize a discount that will never close — by its structural causes, by the balance sheet, and by a set of signals you can verify in public filings — and to keep from mistaking a cyclical stock at the bottom of its cycle for a business in decline.

• — A Discount Can Be Deserved
• — The Four Structural Causes
• — The Balance Sheet, the Final Arbiter
• — Warning signs, and the cyclical counterpoint

Everything you've learned so far serves one question: do you buy, at what price, and how will you know if you were wrong? By the end of this module, you'll have a one-page template, invalidation criteria written in advance, and a selling discipline that no longer depends on what the screen is showing you.

• — The Thesis on One Page
• — The Catalyst, and Why Not to Depend on It
• — Invalidation Criteria, Written in Advance
• — Selling, and Judging Yourself on Process

Discounting cash flows is easy to calculate and hard to do honestly. You'll learn to build a defensible free cash flow, to measure the crushing weight of the terminal value, to deliver a sensitivity table rather than a single number — and above all to reverse the exercise: back out from the stock price the assumptions the market takes for granted, then judge whether they hold up.

• — Discounting: Translating the Future into Today's Money
• — Free cash flow, and the line item most open to manipulation
• — Terminal Value, Where Most of the Answer Lives
• — Sensitivity, and the Question Reversed

A balance sheet that looks solid can hide debt that goes by another name, assets no longer worth their carrying value, and earnings that never turn into cash. This module teaches you to find, in public filings, what the accounting presentation is free not to highlight.

• — The Debt That Doesn't Speak Its Name
• — What the Assets on the Books Are Really Worth
• — From Earnings to Cash: Working Capital and Accruals
• — When Equity Melts and the Refinancing Wall Looms

You judge a manager less by the speeches than by what he does with each dollar earned. Reinvest, acquire, pay down debt, distribute, buy back stock: five uses, one test. By the end of this module, ten years of decisions read straight off the financials — and a share buyback stops being good news on principle.

• — The Five Things a Company Can Do With Every Dollar It Earns
• — Buybacks: the price decides everything
• — Acquisitions: The Premium, the Synergies, and the Winner's Curse
• — Reading Ten Years of Decisions in the Accounts

Cyclical companies look cheap when they are most dangerous and expensive when they are most attractive. This module teaches you to normalize earnings across a full cycle, to read capital cycles, and above all to tell a passing trough from a decline with no return.

• — The Paradox of the Cyclical P/E
• — Working Out Normalized Earnings
• — Cyclical Trough or Structural Decline?
• — Capital Cycles, and What Mean Reversion Does Not Promise

The final module of the course tackles the move nobody teaches: selling. You will learn to recognize the biases that cost the most when it comes time to exit, to counter them with a rule written down before you buy, to tell patience apart from stubbornness during the lean years, and to judge yourself on your process rather than on the outcome of a single decision.

• — To Sell Is to Judge Yourself
• — The Biases That Cost the Most, and How to Beat Them
• — The Only Three Reasons to Sell, and the Pre-Commitment
• — Living Through the Disappointing Years: Patience, Stubbornness, Process