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, including professionals from Visa, Wells Fargo, and Moody's, who receive our insights every Tuesday.
💰ROIC Demystified: Videos, Articles & CFO Insights
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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
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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, including professionals from Visa, Wells Fargo, and Moody's, who receive our insights every Tuesday.
Hey Reader,Did you know that Buffett's initial American Express investment returned 124% in just 2.5 years - While the broader market (Dow Jones) declined by 6% during the same period, Buffett's contrarian bet paid off dramatically by 1967 when the stock more than doubled from his average purchase price of $41.22 to $92.50. In today's issue: Brian Stoffel breaks down how to read the cash flow statement. Warren Buffett's thoughts on tariffs and trade from 2003. Pricing and peer groups from...
Hey Reader, Charlie Munger viewed market swings as opportunities, not threats. He dismissed volatility as risk, instead focusing on business quality and maintaining emotional discipline during market swings. He once said, "we don't give a damn about lumpy results." In today's issue: Warren Buffett and Charlie Munger's thoughts on risk and volatility. Important words in today's markets. Howard Marks on tariffs and credit spreads What is the strongest moat from Nick Sleep Everything about the...
Hey Reader,Did you know the cash flow statement didn't become a requirement until 1987? Before 1987, Companies were not required to prepare one. Instead, they often included a "funds flow statement" or "statement of changes in financial position," which focused on working capital changes rather than actual cash movements. In today's issue: Aswath Damodaran takes us back to the basics of free cash flow Brian Feroldi breaks down the cash flow statement, the base for all free cash flow...