Hello friends. Today’s post shares what I believe is the most important part of the Choose Stocks Wisely methodology. That part is the “quality” balance sheet scorecard checkup. To discuss this is timely, I believe, as more and more people wonder where the stock market heads from here. […]
I wrote my book, “Choose Stocks Wisely,” to address how using the balance sheet is essential to defining quality and low price before assuming the risk of investing in common stocks. Since I’m investing the Lord’s money, it’s important to me that I try my best to mitigate unnecessary risks while allowing for opportunity to realize a good return. […]
This week, a reader of “Choose Stocks Wisely,” wrote me and offered a great suggestion for the post I’m doing today. He brought to my attention the 7 for 1 stock split recently accomplished by Apple, Inc. (symbol AAPL). APPL had traded well over $600 per share before the split of June 9th but since has traded below $100 a share, reflecting the split.
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I’ve been blessed to experience wonderful friendships across my life. What a privilege to teach accounting to people in college over the years! I feel I’ve already made new friends via the website-enabled interaction that surrounds my book, “Choose Stocks Wisely.” Tonight, I will briefly share a very recent interesting question I received.
A reader of my book wrote the following:
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Parts A and B of my Scorecard exist to determine the “quality” of the balance sheet. Parts C and D of the Scorecard use the balance sheet numbers to define a low price “if” quality has been assured in Parts A and B. Taken as a whole, the Scorecard recognizes that a low-risk situation is one where I buy into a healthy company when a share of company ownership is available at a bargain price. The absence of quality or a low price means I’m taking more risk.
As discussed in my book, I use the finviz website to screen for stocks, selecting filters in a manner that would turn up companies that could possibly meet both my quality and low-price standards. The standards are then implemented on a particular stock through the parts of my Scorecard.
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Please note that my Adjusted Floor Price Scorecard has been updated per a helpful request I received from a reader. I hope you will find it more user-friendly. There are more columns for scoring more stocks on the spreadsheet now and the columns have been widened.
I received a very nice note from Joe at my website recently. I’m including the following excerpt in this post. Joe wrote, “What you have also done though is opened my eyes to use this (Adjusted Floor Price Scorecard) for dividend-paying stocks. As you said in your book, the momentum money has piled into these stocks creating a mismatch between adjusted floor price and price today. With that being said, I still see application where I get ‘CONTINUE’ for ‘Liquidity’ and for ‘Solvency’ (from your Scorecard, parts A and B).”
Joe asks, “Do you have any suggested applications of your (Scorecard) spreadsheet to large-cap dividend-paying stocks?”
Joe asks a great question. I’ll respond to Joe’s specific question toward the end of this post but first I’ll use the essence of his question to hone in on my Adjusted Floor Price Scorecard further. Please note that the discussion here will only make sense if you have read my book, Choose Stocks Wisely, and sought to apply the Adjusted Floor Price Scorecard, revealed and explained in the book.
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