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Monthly Archives: February 2014

Has The Stock Market Gotten Too High?

This is a question I’m receiving a lot lately and, frankly, a question worth pondering. I’ve never read about anyone who consistently (time and time again) has correctly predicted the end of bull or bear markets, or even consistently predicted the timing of temporary market corrections. Far be it from me to attempt to do so. Many people got out of the stock market near the lows of late 2008 and early 2009 and have missed one of the largest market increases since then in the history of the stock market. Emotions tend to make investors “react” and thereby “act” at just the wrong times.

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February 27th, 2014|Balance Sheet, bear market, bull market|5 Comments
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Financial Companies Are Different

I’ve received several e-mails from readers of my book, Choose Stocks Wisely, who have observed that financial companies don’t have the subtotals for “current assets” and “current liabilities” on their balance sheets. These amounts are required as inputs by my Adjusted Floor Price Scorecard, specifically to complete Part A on testing for adequate liquidity.

Further, two of my finviz.com screening filters are the quick ratio and the current ratio. Both of these ratios require that the current asset and current liability amounts be available. Thus, banks and other financial companies will not satisfy my screening filters due to “lack of available data.” Keep in mind, to run a finviz screen which can potentially yield financial company stocks among non-financial company stocks, any filter that depends on a current/non-current balance sheet account breakout must be excluded as a filter.

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February 19th, 2014|Balance Sheet, current assets/current liabilities, financial companies|2 Comments
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Financial Leverage and Risk

I talked this week about financial leverage during one of the college courses I’m teaching this semester. Financial leverage describes the use of debt financing as a means of levering earnings higher. Using debt financing is like using a crowbar on earnings. Indeed, when a company is experiencing profitability, it can enhance profits through the benefits of using debt to finance the assets used in operations.

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February 13th, 2014|Balance Sheet, earnings, Risk|2 Comments
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Filing Financial Reports

If your experience is like mine, it seems that many things seem to pile up this time of year. We all have to either do our own taxes or get things together for them to be done by another. As a CPA, I simply can’t bring myself to having someone do my taxes for me although I get sorely tempted at times. Anyway, that April 15th deadline will be here before we know it.

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February 8th, 2014|10Q and 10K, financial information|2 Comments
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