Monitor That Balance Sheet, Friends
Hey Friends. I hope you’re well this day! It seems we are catching somewhat of a reprieve from the pandemic. How wonderful to ponder when pandemic is a word no longer a part of daily life. […]
Today: Quality of Balance Sheet Never More Important
Hey Friends. I hope this post finds you well.
As you know, my book, “Choose Stocks Wisely,” emphasizes the key role the balance sheet plays in assessing risk. If one wants to see how sturdy a company is financially, how able to weather a financial storm, how able to take advantage of opportunity that presents itself, etc., that person will surely seek out the information found on the balance sheet. It can’t be found on the income statement or the statement of cash flows. These latter 2 reports give a person information on recent business activity that may provide some sense of a business’s future prospects and their possible impact to the balance sheet. But only the balance sheet says “here’s where things stand today.” […]
Retained Earnings — What exactly is it??
Hey friends. The Fall season is already upon us. Of course, we know that Thanksgiving and Christmas will also be upon us soon. Yes, time races by as the Scripture says. May God bless you with His wisdom in your comings and goings. […]
Cash Flow From Operations
Hey Friends,
I didn’t write my book, “Choose Stocks Wisely,” to advocate individual stock investing. Rather, I wrote it to communicate how imperative it is to analyze a company’s balance sheet before investing in any publicly traded stock. There is no substitute for the balance sheet in proper risk assessment. I appreciate each of you for reading my book and my blog posts, and for telling those in your circles who already invest in common stocks about my book. […]
Interest Rates and Stock Market Sensitivity
Hey Friends. I hope you are well!
There are a number of reasons why the current stock market is perhaps more sensitive (vulnerable) to interest rates than perhaps any other stock market we’ve known previously. Just over a week ago, we all witnessed how rapidly the tech-heavy Nasdaq Composite Index dropped due to the rise in treasury yields. This week saw the yields settle and the stock market, including tech, rebounded significantly. […]
Stock Market Red Flags Abound
Hey Friends. I’m praying for your health and safety during these very different times we are experiencing.
Recently, you may have read my blog post titled, “Frothy Market.” Today, you’ll find linked in this post a few articles that express the thinking that we are in an extremely exaggerated stock market. One article suggests that across asset classes, bubbles are forming in terms of loftiness of business valuations against business fundamentals. My personal thoughts more or less align with this take of asset bubbles everywhere. […]
Frothy Market
Hey Friends,
I hope you had a wonderful Thanksgiving. It was a different kind of season this year but, at the same time, an opportunity to soberly consider our deepest blessings.
So many are impacted by the coronavirus at the present time. A third friend in my locale passed away from complications of the virus — the passing of these friends happening over recent weeks. I’m praying for you and know God is able to meet our deepest needs. […]
A Plug for Choose Stocks Wisely
Hey Friends,
Promotion is not my thing when it comes to trying to sell myself. But I decided to put in a plug for my book, “Choose Stocks Wisely,” today. The commentary is due to heightened concern over the uncertainty of what’s ahead for our economy. […]
Stay Liquid
Hey Friends.
From a money management perspective, the title of this post befits the moment. In my view, we are in a particular time where being oriented toward cash positions seems sensible. A national election is fast approaching and since the political parties are of such differing views on virtually every aspect of governing, including economic oversight, the uncertainty is almost palpable. […]
Smooth Earnings and Accounting
Hey Friends,
Perhaps you’ve read some of the research on the application of accounting rules to “smooth” earnings. What is meant by smoothing earnings? Here’s a good description:
“Income smoothing is the shifting of revenue and expenses among different reporting periods in order to present the false impression that a business has steady earnings. Management typically engages in income smoothing to increase earnings in periods that would otherwise have unusually low earnings. The actions taken to engage in income smoothing are not always illegal; in some cases, the leeway allowed in the accounting standards allows management to defer or accelerate certain items.” […]