1/ "There's only one thing we know for sure and that’s the stock price. So then reverse engineer what has to happen for that thing to make sense and then try to judge whether that sensible. ...lay bare the underlying assumptions and then debate them." ritholtz.com/2021/12/transc…
2/ "If you invest in your business and you’re earning exactly your cost of capital, growth doesn’t make any — doesn’t add any value whatsoever. And so earnings growth can be good, it can be bad, it can be indifferent. ...Free cash flow is the number we try to keep our eye on."
3/ Tangible assets are capitalized on the balance sheet showing up in the income statement as depreciation. "By contrast, intangible investments are fully expensed [which means] earnings are a lot lower than they would otherwise be."
This accounting mistake is your opportunity.
This accounting mistake is your opportunity.
4/ "If you’re focusing on cash flow, these [broken accounting conventions], become much less important because we’re getting to the ultimate rude answer. ... it’s about cash flows. ... the value of a business is the present value of the cash flows."
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