Most of these important lessons are well known already, but still, it is important to re-read some things. Ie, I stumbled over Boesky and the timeless adage ‘if sth can’t go on forever, it will end‘.Continue reading “Book-review: The Essays of Warren Buffett, Cunningham”
Category: Foundations, Concepts
Free Cash Flow: It always was FCFF or FCFE
I hold a strong opinion for a long time: if it is about valuation visit Damodaran.Continue reading “Free Cash Flow: It always was FCFF or FCFE”
Fair P/E multiples as a function of Growth and ROIC
I always thought I was a bit more valuation focused than the average investor, and this likely results from my academic studies which was quite focused on methods. Sure, no science at all, but art and so forth, but some simple truths are important …Continue reading “Fair P/E multiples as a function of Growth and ROIC”
P&C Insurance Economics 103.1: P&C Insurance, inflation and higher rates
P&C and especially Auto insurance companies’ earnings get pressured by higher combined ratios driven by claims inflation. As some central banks raise interest rates to tackle inflation forward investment returns support earnings and returns on equity. Higher investment income might increase competition and pressure underwriting margins further. …Continue reading “P&C Insurance Economics 103.1: P&C Insurance, inflation and higher rates”
Book-review: Quality of Earnings by O’Glove
The investor’s guide to how much money a company is really making.Continue reading “Book-review: Quality of Earnings by O’Glove”
P&C Insurance Economics 103: Decomposition of ROE, Growth, and P/B
I quickly look at three insurane companies decomposing ROE drivers …Continue reading “P&C Insurance Economics 103: Decomposition of ROE, Growth, and P/B”
P&C Insurance Economics 102: ROE drivers
I recently spend some time thinking and thinking about the ROE drivers of insurance companies. It was not a constant process but the understanding came to me as returns do: chunky and non smooth …Continue reading “P&C Insurance Economics 102: ROE drivers”
Review of Bedrock AI – a screening tool for risk
I was approached on Twitter if that they liked my tweets (at least one 🙂 ) and asked if I wanted a free trial of the product. I said yes and tried it …Continue reading “Review of Bedrock AI – a screening tool for risk”
Launch of my Thesis Tracker: Q3 2021
Oriental Watch released results a few dasy a go, so I can finally publish this piece.Continue reading “Launch of my Thesis Tracker: Q3 2021”
Thought on Emerging Markets; and playing (Russian) roulette?
With some of my best performing stocks being emerging market plays, I got to think about the question of …Continue reading “Thought on Emerging Markets; and playing (Russian) roulette?”
Portfolio construction (part 1)
I struggle to decide on position sizes and wanted to formalize the process for some time. This is part one that ends with a conclusion I am eager to build on.Continue reading “Portfolio construction (part 1)”
Biases, biases, biases
Biases are everywhere in life and to improve as an investor, knowing about our biases is the crucial first step before tackling them and improving our investment process. Here I will provide a list of biases …Continue reading “Biases, biases, biases”
Relationships are the most important thing in life! Value investors care about the price-value relationship!
Last year, many of us have experienced that living our lives without other people is pretty dull. And hopefully 2021 will bring back all the strongly missed personal interactions! Many of us want nothing more than to do all the usual things taken for granted: visit restaurants, having a drink or two, going to a party and on vacation, or just spending time with people you like. Relationships are key!Continue reading “Relationships are the most important thing in life! Value investors care about the price-value relationship!”
Do you use fair value or intrinsic value?
The two expressions intrinsic value and fair value are used interchangeably by most investors, certainly including myself so far! I believe we should use the two expressions more deliberately going forward and focus on the small differences. Here is why …Continue reading “Do you use fair value or intrinsic value?”
The 100-Dollar-Company or The Importance of Time (for High Returns)
Return metrics are usually normalized to annual periods. And this is because the dimension of time plays a crucial role in the realm of investment returns.Continue reading “The 100-Dollar-Company or The Importance of Time (for High Returns)”
A General Risk Framework
According to academia, the cost of equity can be calculated using the CAPM, a central model to modern financial theory. But even Damodaran critizes this as a statistical approach usually considered too narrowly. Damodaran tends to and recommends to think about business risk in a more general sense first, without applying sophisticated and data-heavy statistical methods (which might have its place).Continue reading “A General Risk Framework”
My initial Thoughts on Competitive Advantages and Economic Moats
Moats were useful in ancient times to defend a castle from adversaries. It is defensive work that makes it harder for attackers to infiltrate the caste. (Economic) Moat is an expression used in the domain of value investing describing specific features protecting a business from competitors.Continue reading “My initial Thoughts on Competitive Advantages and Economic Moats”
The Importance of Position Sizing and Trade Execution Rules – Have You thought enough about it?
Risk management needs strict rules. To limit potential harm from our emotions, errors and bad luck, the introduction and adherence to specific position limits and execution rules are very important. I am going to discuss some rules you might find useful below …Continue reading “The Importance of Position Sizing and Trade Execution Rules – Have You thought enough about it?”
About Catalysts in the Chemistry Lab and the Investing World
A catalyst is a substance which increases the rate of a chemical reaction, according to wikipedia. In the realm of value investing, a catalyst is an event that brings the price of a traded security more into line with its fair value. The catalyst gets the reaction started …Continue reading “About Catalysts in the Chemistry Lab and the Investing World”
How do Share Buy Backs and Other Sorts of Capital Allocation create Shareholder Value for You?
As a shareholder, you do want to know if all these share buy backs create value for you (and me) …Continue reading “How do Share Buy Backs and Other Sorts of Capital Allocation create Shareholder Value for You?”
Am I a Gambler🎲? And Striking Similarities between Gambling and Investing!
During the current corona crisis I interpret the ongoing social distancing measures quite strictly for myself. Meaning, I have not meet friends for dinner or for a drink or anything else (besides for a running) in real live for a few weeks now and! it! sucks!. So, I had to come up with a better solution for my evenings than watching TV each day …Continue reading “Am I a Gambler🎲? And Striking Similarities between Gambling and Investing!”
Number of Shares Outstanding
The last step within a DCF valuation, is to divide the estimated fair equity value over number of shares outstanding to get to your estimate of fair value per share. This article discusses how to calculate the number of shares outstanding correctly and related issues, such as …Continue reading “Number of Shares Outstanding”
DCF Valuation Framework
This post describes the handling of leasing liabilities and leasing expenses wihtin the concept of discounted cashflow or DCF valuation. It is a follow-up post after IFRS 16 – Leases and What is Debt?, answering the question of How to Capture Lease Payments into Perpetuity. But first, I do a quick Introduction to DCF Valuations to get a better understanding of the topic.Continue reading “DCF Valuation Framework”
What is Debt?
As announced in my previous post about IFRS 16 Leases, this follow-up post dicusses the question of What is Debt? . First, I describe common Features of Debt and Leasing Liabilities as well as answering Why to treat them as Debt. Then I discuss What Items to include in Debt and How to calculate Net Debt. Finally I give a Summary of the article and an Outlook on a further follow-up post discussing How to incorporate Net Debt within a DCF Valuation.Continue reading “What is Debt?”
IFRS 16 – Leases
As more and more financial reports discuss the topic of IFRS 16 – Leases adoption and how its affects their reporting, I decided it is time to get a better understanding of the scope of IFRS 16 and how it affects reporting items within Balance Sheet, Income Statement and Cashflow Statements. In conclusion, I am going to describe some effects on Financial Ratios as well as giving an outlook on implications on Net Debt and Valuation Concepts.Continue reading “IFRS 16 – Leases”