Unlock the mysteries of the stock market with us! We break down complex topics into simple, easy-to-understand language. Join over 21,000+ readers who receive our insights every Tuesday.
💰ROIC Demystified: Videos, Articles & CFO Insights
|
Hey Reader, Over the long term, it's hard for a stock to earn a much better return than the business which underlies it earns. If the business earns 6% on capital over 40 years and you hold it for that 40 years, you're not going to make much different than a 6% return -- even if you originally buy it at a huge discount. Conversely, if a business earns 18% on capital over 20 or 30 years, even if you pay an expensive-looking price, you'll end up with one hell of a result. In today's issue:
💸Sponsored by: Investing is hard. Trying to pick individual stocks takes time and effort. But what if you could find someone to do the work for you? Well.....that's exactly what Andrew does at Value Spotlight. He spends time reading the financials, listening to earnings calls, analyzing the industry, valuing companies, and considering the potential downside. All the necessary ingredients to buy individual companies. Outsource your investments and save time for what you want to do with Value Spotlight. 💎NUGGETS My Favorite Finds 📖 How to calculate Return on Invested Capital from Michael Mauboussin. The gold standard. 🎥 Great video from Andrew breaking down how to calculate ROIC and WACC from the financial statements. 📖 How ROIC and growth create value from Thomas Chua (Steady Compounding). 🎥 YouTube lecture from Aswath Damodaran showing how to calculate the cost of capital or WACC. 📖 Warren Buffett's three categories of ROIC. 🧵 Breakdown of how to think about ROIC from a CFO 🔍Question of the Week
📖Knowledge Tidbits
Thanks,
|
Hi! Welcome to Investing for Beginners
Unlock the mysteries of the stock market with us! We break down complex topics into simple, easy-to-understand language. Join over 21,000+ readers who receive our insights every Tuesday.
Hey Reader,Did you know that before becoming a successful investor, Mohnish Pabrai bootstrapped his IT consulting company TransTech in 1991 with just $30,000 from his 401(k) and $70,000 from credit card debt. He later sold this company for $20 million in 2000. In today's issue: The math behind Buffett's position sizing, the answer surprise me. Where do tech returns come from and how will they look in the future? Breakdown of how to analyze an income statement visually. Much more........
Hey Reader,Terry Smith of Fundsmith believes that owning a great business that can compound its value over many years is far more beneficial than buying a mediocre company at a cheap price. He often quotes Warren Buffett: "It is better to own a great company at a fair price than a fair company at a great price," because the great business is a "gift that can keep on giving" long after a cheap stock has simply reached its fair value. In today's issue: How to estimate growth in a DCF with...
Hey Reader,Did you know that the S&P 500's lowest recorded P/E ratio was 5.31 in 1917, while its highest was 123.73 in May 2009, during the financial crisis? This represents a range of over 2,200% between the most undervalued and overvalued market conditions, demonstrating how dramatically valuation perspectives have shifted across different economic eras. In today's issue: Warren Buffett breaks down how he would invest if he could start over. What is never sell really? Why ROIIC is more...