💰Learn How the Financial Statements Connect

Hey Reader,

Did you know? While at the Wharton School of the University of Pennsylvania, Joel Greenblatt published a paper titled "How the Small Investor Can Beat the Market" in The Journal of Portfolio Management. (Late bloomer).

In today's issue:

Learn how the financial statements connect
Warren Buffett on legacy and the importance of time
Four simple ways to value a company
The basics of earnings per share
Much more......

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When people ask what I do for a living, the most common response I hear is,

"Investing? Oh yeah I should get on that."

Sadly, we don't achieve our goals because we let life happen to us.

How much longer will you wait to learn how to truly analyze a stock the right way?

Our PIVOT framework was created for that.

Do something to finally find a new life with your investments. Don't just say you "should" or "will maybe."

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💎NUGGETS

My Favorite Finds

Learn how the financial statements connect, surprisingly many new investors don't understand this (I know I didn't and it was mind-blowing once I did).

Warren Buffett recently shared his views on time and mortality and his plans. Always worth a read.

Stop focusing on others and play your own game.

Screeners you can use to find quality companies ala Peter Lynch and Terry Smith.

Want to learn how the "Innovator's Dilemma Works?" Check out this video.

Diversification basics from 10-k Diver, well worth your time.

🔍DEEP DIVE

One of the hardest parts of investing is figuring out what it is worth.

It's how investors decide if a stock is a good deal or overpriced.

Let's unlock the secrets with four awesome valuation tools:

𝟭. 𝗣/𝗘 𝗥𝗮𝘁𝗶𝗼: 𝗧𝗵𝗲 𝗣𝗼𝗽𝘂𝗹𝗮𝗿𝗶𝘁𝘆 𝗖𝗼𝗻𝘁𝗲𝘀𝘁

Imagine a company as a basketball team. The P/E ratio tells you how much fans will pay for each point the team scores. A high P/E means the team is popular (maybe they're on a winning streak!), but it could also mean they're overpriced.

𝟮. 𝗙𝗖𝗙 𝗬𝗶𝗲𝗹𝗱: 𝗧𝗵𝗲 𝗖𝗮𝘀𝗵 𝗙𝗹𝗼𝘄 𝗞𝗶𝗻𝗴

Free Cash Flow (FCF) is the money a company has left over after paying its bills. FCF Yield is like finding out how much allowance you get for every dollar you have saved. Higher allowance = better, right? A high FCF Yield means the company is making bank and could be a bargain.

𝟯. 𝗗𝗖𝗙: 𝗧𝗵𝗲 𝗧𝗶𝗺𝗲 𝗧𝗿𝗮𝘃𝗲𝗹𝗲𝗿

Imagine predicting the future! DCF is like a crystal ball that helps us estimate how much money a company will make in the years to come. By bringing those future earnings back to today's value, we can see if the current stock price is a steal.

𝟰. 𝗥𝗲𝘃𝗲𝗿𝘀𝗲 𝗗𝗖𝗙: 𝗪𝗼𝗿𝗸𝗶𝗻𝗴 𝗕𝗮𝗰𝗸𝘄𝗮𝗿𝗱𝘀 𝘁𝗼 𝗦𝘂𝗰𝗰𝗲𝘀𝘀

Reverse DCF is like figuring out how many points a basketball team 𝘯𝘦𝘦𝘥𝘴 to score to win the championship. We start with the desired stock price and work backward to see what the company needs to achieve to make it happen.

𝗥𝗲𝗺𝗲𝗺𝗯𝗲𝗿: These are just a few tools in an investor's toolbox. It's always best to research and consider all the factors before making any investment decision.