Thursday, July 28, 2016

Hastiness Can Be a Liability


Always carefully weigh factors before making an investing decision.

www.stockdissector.com

Monday, July 25, 2016

Navigating Rough Times


Holding on during rough times represents a true test for the long-term investor. However, due diligence is always recommended. A company or industry might not pull through. Ultimately it is your decision on whether or not to keep shares in a company.

www.stockdissector.com

Friday, July 22, 2016

Look Past Entertainment


A number of financial articles can be geared for entertainment, especially if they are about politicians. While entertainment is nice, always focus and do your own research.

www.stockdissector.com

Wednesday, July 20, 2016

Don’t Use Just One Metric


Don’t rely on one single metric such as the P/E ratio. Use a complete analysis to get an overall picture of your investment.

www.stockdissector.com

Tuesday, July 19, 2016

Have you developed an investment philosophy?


Developing an investment philosophy that works enhances your chances of successful investing over the long-term.


Monday, July 18, 2016

Think for Yourself During Earnings Season


Remember when looking at earnings headlines to dig deeper, think for yourself and make your own decisions.


Friday, July 15, 2016

Buy and Hold is Best


Finding good quality publicly traded businesses to own over the long-term allows you to sleep better than utilizing trading strategies that could turn on you in a dime.

www.stockdissector.com

Thursday, July 14, 2016

Beware of Euphoria


Delight can turn into disappointment real quick in the stock market.

www.stockdissector.com

Wednesday, July 13, 2016

Risking Assets Just to Get a Return at All


Once upon a time if you wanted to get a risk free return on your investment, you put cash in a savings account. If you wanted a superior return, you risked at least part of your cash in the stock, bond, and/or commodities market for a shot at superior returns.

Now, in this low to negative interest rate environment, you get almost no risk free return or even have to PAY to keep your savings safe. You need to risk at least part of your cash just for the potential of a return at all.


Tuesday, July 12, 2016

Beware of Bubbles


Record low interest rates translate into stock bubbles as investors seek a decent return on their investment. This means that some companies will trade at excessive valuations even though fundamentals may be stagnant or eroding. Do your research before investing and make sure that valuations aren’t too excessive. Also, it may pay to keep some cash on hand to invest during any potential corrections.

Friday, July 8, 2016

Doing nothing….


Sometimes the best course of action for long-term investors is to do nothing. Especially if stock prices are fueled by a bubble brought on by low interest rates.

www.stockdissector.com

Thursday, July 7, 2016

Acquisitions Can Be Depressing for Long-Term Investors


Long-term investors should lament the acquisition of any of their rock solid publicly traded business. That means they will no longer be able to participate in any potential profits in that business. They essentially sell that right for some cash that will need redeployed in some profitable manner.


Wednesday, July 6, 2016

Make Sure a Dividend is Solid


When a company’s stock pays an enticing dividend yield, always make sure that it’s supported by free cash flow. Dividends not supported by free cash flow would need to come from external financing such as a stock sale or debt financing. This could prove detrimental to your publicly traded businesses over the long-term. I prefer to see companies pay out less than 50% of their free cash flow and retain the rest for other purposes.


Monday, June 27, 2016

Hunting Time for the Value Investor


Global volatility in the stock market means that long-term business oriented investors should go looking for solid publicly traded businesses selling on the cheap.

www.stockdissector.com

Friday, June 17, 2016

Take Care of What You Have


Nothing depletes your cash more than replacing a piece of household equipment that wasn’t properly maintained.

Thursday, June 16, 2016

Rainy Day Fund Could Morph Into a Rainy Year Fund


You never know how tough things are going to get. It pays to have an emergency fund that will pay bills for a year and a half.


Wednesday, June 15, 2016

Pay Your Credit Card Off On Time


Always make sure you pay your credit card bill in a timely fashion. If you don’t, interest costs will accrue. The accrual of interest expense represents reverse compounding of wealth.

Tuesday, June 14, 2016

Focus On What’s Important


On any given day the stock market will go up some and down some. Long-term investors in publicly traded businesses should focus on things such as growth in revenue, net income and free cash flow and whether or not they sit behind high barriers to entry.

www.stockdissector.com

Monday, June 13, 2016

Risk of Permanent Loss in the Stock Market


Remember there is always a risk of permanent loss in the stock market. The most widely known route to a permanent loss is bankruptcy. Another way is that a company that you own shares in may go private at a price less than what you paid for.

www.stockdissector.com

Friday, June 10, 2016

Long-Term Investors Love Corrections


Stock market corrections enable long-term investors to purchase shares in excellent publicly traded companies on the cheap.

www.stockdissector.com

Thursday, June 9, 2016

Look to the Future


Looking at past oppressions and failures will not help you move forward in your career if you only obsess on them. Try to learn something useful from the experiences.

Wednesday, June 8, 2016

You Have to Make Your Own Security


In a day and age where employment is increasingly tenuous, it pays to maintain the viewpoint of building your own security. People needs to build their own retirement, healthcare and (increasingly) even their own career by owning a business or pursuing some form of self-employment as employers increasingly become unreliable. All of this takes money. Save all you can while you can.


Friday, June 3, 2016

The Importance of Earmarking


It is important NOT to think of money as a generic commodity. Every dollar has a purpose. Thinking along those lines goes a long way in properly managing your finances.

www.stockdissector.com

Thursday, June 2, 2016

Wednesday, June 1, 2016

Thoughts on Stock Prices


Long-term investors should always look for lower stock prices. Lower stock prices enhance the chance of superior returns over the long-term. However, diligent investors should make sure that the correction isn’t justified.


Friday, May 27, 2016

Pursuing Career Passions Makes The Bumps Easier


When you are pursuing your career passions, it makes it easier to get past the inevitable bumps in the road.


Wednesday, May 25, 2016

Always Look for Bargains in the Stock Market


Long-term investors should always strive to find stocks of publicly traded businesses with decent fundamentals trading at low valuations. The cheaper the stock the better the chances of achieving a superior return.


Tuesday, May 24, 2016

Invest in Educating Yourself


Always invest in educating yourself. It doesn’t necessarily mean go to college. It could mean learning a trade skill and reading books to improve your knowledge in areas such as investing, technology or any other fields that you may want to pursue.

www.stockdissector.com

Monday, May 23, 2016

Advantages of Dividend Stocks


Buying shares of companies that pay a dividend is like purchasing an income stream. Investing in companies that regularly boost their dividends is like getting a raise on a consistent basis. Of course, it comes with risks. Those dividends need to be backed by expanding free cash flow and a company shouldn’t pay too much of its free cash flow out in dividends. Personally, I prefer that a company that pays out less than 50% of its annual free cash flow out in dividends.


Tuesday, May 17, 2016

Save for a Rainy Year


Sometimes you need to save for a rainy year. You need an emergency fund to cover at least a year or more of expenses.


Monday, May 16, 2016

Thoughts On Negative Interest Rates Part II


Part of the motive behind negative interest rates is to get people to spend more money. When people spend money it disempowers them. Perhaps this is what central banks and governments want?

Friday, May 13, 2016

Three Ways to Save


There are three ways to save: 1) Spend less than you earn 2) Make more than you spend 3) The combination of No. 1 and No. 2. Understandably, it’s more difficult for some people to do this than others. However, if you want to accumulate wealth you should strive to do these things.

www.stockdissector.com

Thursday, May 12, 2016

Are you prepared for the proverbial floods in life?


Always be prepared for unexpected life events such as a job loss or cut in benefits. Always have enough cash on hand to pay for 1-2 years of life expenses.

www.stockdissector.com

Wednesday, May 11, 2016

What is common stock?


A share of common stock represents an ownership interest of a business.

www.stockdissector.com

Tuesday, May 10, 2016

Is there waste in your financial life?


Figuring out wasteful expenses will help you save.

www.stockdissector.com

Monday, May 9, 2016

Don’t let greed get in the way of rational thinking


Greed can cause you to make bad investing decisions. Seeing a popular stock go up in value may make you feel like you are missing out on great riches when you may be buying at the top. Make sure you hit the pause button and research a particular investment before taking the plunge.

www.stockdissector.com

Wednesday, May 4, 2016

Are stocks on sale?


Long-term investors should look at stock market corrections in the same way that a shopper looks at discounted merchandise.


Tuesday, May 3, 2016

Do you live for your neighbors?


Chances are they don’t care about the newest vehicle or boat that you bought.


Monday, May 2, 2016

Thoughts on Negative Rates


Some countries have negative interest rates, which means some savers and bond investors actually pay for the privilege of saving and investing. This could potentially happen in the United States if global trends hold up. What kind of perverse world punishes saving???


Friday, April 29, 2016

What is a forward P/E ratio?


Forward P/E Ratio = Stock Price/Estimated earnings per share. This compares to the P/E ratio which is based on known earnings per share.


Thursday, April 28, 2016

What is a dividend?


A dividend is the amount of cash that a shareholder receives from a company. Dividends are typically paid in quarterly. Some companies like to pay on a monthly, semi-annual and annual basis.

www.stockdissector.com

Wednesday, April 27, 2016

What is return on equity?


Return on equity (ROE) is defined by the following formula—(Net Income/Stockholder’s equity) x 100. Sometimes investors use this formula—(Net Income/Average Stockholder’s equity) x 100. I like to see companies with ROE of 12% or more.

www.stockdissector.com

Tuesday, April 26, 2016

What is long-term debt to equity?


Long-term debt is defined by the following formula: (Long-term debt/Stockholder’s equity) x 100. I like to see companies with long-term debt amounting to 50% or less of stockholder’s equity.


Monday, April 25, 2016

What is cash to stockholder’s equity?


I like to use a measure called cash to stockholder’s equity defined as (Cash/Stockholder’s Equity) x 100. I like to see companies hold cash amounting to 20% or more of stockholder’s equity to get them through tough times, expand, pay dividends, etc.

www.stockdissector.com

Friday, April 22, 2016

What is profit margin?


Profit Margin = (Net Income/Revenue) x 100. Investors desire this percentage to stay steady or increase over time.


Thursday, April 21, 2016

What is operating margin?


Operating Margin = (Operating income/Revenue) x 100. You would want this percentage to stay steady or increase over time. Moreover, I prefer that operating income exceeds interest expense by five times.

www.stockdissector.com

Wednesday, April 20, 2016

What is gross margin?


Gross margin = (Gross profit/revenue) x 100. Investors want to see this percentage stay steady or go up over the long term.


Tuesday, April 19, 2016

What is current ratio?


Current ratio = Current Assets/ Current Liabilities. I like to see 2 or more on this measure.

www.stockdissector.com

Monday, April 18, 2016

What is times interest earned?


Times interest earned = operating income/ interest expense. Five or greater is considered a good conservative ratio.


Friday, April 15, 2016

What are unrealized gains?


Unrealized gains represent the increase in the value of your stock on paper. These gains don’t become cash unless you sell your holdings and then it becomes realized gains.

www.stockdissector.com

Thursday, April 14, 2016

What is dividend yield?


Dividend Yield = [Annual dividend per share/Stock price per share] x 100

www.stockdissector.com

Wednesday, April 13, 2016

What are earnings per share?


Earnings per share (EPS) = Net Income/Shares Outstanding

www.stockdissector.com

Tuesday, April 12, 2016

What is a P/E ratio?


P/E Ratio = Stock Price/Earnings per Share


Monday, April 11, 2016

The Coin Jar


Pennies add up to dollars. Throwing change into a jar is better than not saving anything at all. It can actually add up to a somewhat decent amount over time.




Thursday, April 7, 2016

Cash is King in Investing


Remember to always keep enough cash (above and beyond your emergency fund) to take advantage of any opportunity provided by stock market corrections. Stock market corrections mean you can buy quality companies on the cheap.


Wednesday, April 6, 2016

Have you done your research?


Before investing in anything you should do your research. You may be investing in a proverbial lemon that could cost you your investment.

Go to stockdissector.com

Tuesday, April 5, 2016

Stock Price Corrections are Good


Lower stock prices means long-term investors can pick up shares of good companies on the cheap.

Go to stockdissector.com

Monday, April 4, 2016

Have you thought about earmarking your money?


Not all dollars are the same. Some money gets allocated to various outlays such as utilities, recreation and investing.


Friday, April 1, 2016

Have you thought about your stock’s valuation?


The chances of getting a good return on your investment depend not only on the business viability of the company behind your stock but paying a good price. One simple way to determine whether or not your stock is cheap is looking at the company’s P/E ratio. Buying shares in a company backed by solid fundamentals with a low P/E ratio could improve your total return over the long-term.

Go to stockdissector.com

Thursday, March 31, 2016

The Importance of Perseverance


Succeeding in life means that you don’t give up.

www.stockdissector.com

Wednesday, March 30, 2016

The Key to Success


Integrity, authenticity, and due diligence will increase the chances of success.

Go to stockdissector.com

Tuesday, March 29, 2016

Does your company consistently grow free cash flow?


It’s often rewarding for people to own shares in companies that consistently expand their free cash flow.


Monday, March 28, 2016

Wednesday, March 23, 2016

Have you thought about where your dividends come from?


Dividends should come from free cash flow. You should look for companies with dividends amounting to less than 50% of annual free cash flow.

Tuesday, March 22, 2016

Friday, March 18, 2016

Have you ever thought about the businesses behind your stocks?


You take ownership of dynamic businesses when you purchase shares.

www.stockdissector.com

Thursday, March 17, 2016

Wednesday, March 16, 2016

Emergency Fund for Volatile Times


Volatile economic times call for a bigger emergency fund. It would pay to have enough cash to pay for a year to 2 years’ worth of expenses. Easier said than done for the vast majority of people, but if you are in a position to do it by all means do so. On another note, you should have a decent emergency fund before you invest in stocks.

Tuesday, March 15, 2016

Pursue Your Passions


It takes perseverance to succeed. It is much more difficult to give up on things that we are passionate about when things get tough.

Go to stockdissector.com

Monday, March 14, 2016

Financial Thought of the Day March 14, 2016: When The Stock Market Goes Down….


When long term investors see the stock market declining, they should go shopping for excellent publicly traded companies on the cheap.

Go to stockdissector.com

Friday, March 11, 2016

Financial Thought of the Day March 11, 2016: Think Before You Spend


Before you spend money on something, think to yourself, “Do I really need this?” This best way to save is not spend at all if you can help it.


Thursday, March 10, 2016

Financial Thought of the Day March 10, 2016: Personal Income Statement


One way to keep track of whether or not you live within your means is to do a personal income statement. Take what you make each payday or time period such as a month and subtract what you spend. If the number is positive, then you are spending less than you earn. If that number is negative you are either leaning on savings or credit to prop you up. If it is negative, you need to figure out a way to earn more and/or spend less. It’s preferable to make more and spend less.

Go to stockdissector.com

Monday, March 7, 2016

Financial Thought of the Day March 7, 2016: Reading the Annual Letter to Shareholders


When researching a publicly traded company, it always pays to read the annual letter to shareholders. It can tell you a great deal about the qualitative characteristics of a company. Of course, this isn’t the only thing you should do in your research, but it represents one important component.


Friday, March 4, 2016

Financial Thought of the Day March 4, 2016: Always Dig Deeper

Just because a company beats Wall Street estimates doesn’t necessarily mean that it expanded its fundamentals for the quarter or that it makes a great investment over the long term. Conversely, just because a company doesn't beat Wall Street estimates doesn’t necessarily mean that a company is seeing degrading fundamentals or that investors stand to lose everything over the long term. Always dig deeper.


Thursday, March 3, 2016

Wednesday, March 2, 2016

Financial Thought of the Day March 2, 2016: It Pays to Read to the Bottom….


It pays to read to the bottom of any article, document, paper, etc. when researching stocks. Sometimes the best information occurs somewhere in the middle of the discourse or sometimes near the bottom.

Go to stockdissector.com

Tuesday, March 1, 2016

Financial Thought of the Day March 1, 2016: Think Long-term When Investing in Stocks


When investing in stocks it’s important to think about how the business behind the stock will do 5-10 years down the road.  Don’t think about what the stock price is going to do over the next few days, weeks or even months.


Monday, February 29, 2016

Financial Thought of the Day February 29, 2016: Berkshire Hathaway’s Superstar Returns


On February 27, 2016, Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B) came out with its 2015 annual report. In the report, the company illustrated that its stock gave shareholders a 20.8% annualized return from 1965 – 2015. Over 50 years, a 20.8% annualized return would turn a $100 investment into $1,268,664.29.

*Disclosure William Bias (stockdissector) owns shares in Berkshire Hathaway’s Class B shares.

Friday, February 26, 2016

Financial Thought of the Day February 26, 2016: Building Wealth (Revisited)


The key to building wealth is spending less than you earn and save/invest the rest. It is as simple as that.

Go to stockdissector.com

Thursday, February 25, 2016

Financial Thought of the Day February 25, 2016: Something Doesn’t Come for Nothing


Something never comes for nothing. Don’t sit around waiting for a family member, politician or some other party to do something. Maintain the mindset of working for your money and spending less than you earn.


Wednesday, February 24, 2016

Financial Thought of the Day February 24, 2016: Saving a Percentage


It’s best to set aside 10% of your paycheck for a rainy day. If you can’t do that then try 5%, 3% or even 1%.


Tuesday, February 23, 2016

Financial Thought of the Day February 23, 2016: Keep Emergency Fund in Cash


Your emergency fund should be kept as cash in a really liquid bank account such as a passbook savings account or checking account. Don’t put that money at risk. If you invest in risky assets such as stocks then you may have to sell at a loss when you need it the most.


Monday, February 22, 2016

Financial Thought of the Day February 22, 2016: Invest in Yourself


Learn skills and/or concepts that will enable you to earn enough income to exceed your expenses.

Go to stockdissector.com

Friday, February 19, 2016

Financial Thought of the Day February 19, 2016: Stock Market Risk


Investing in the stock market doesn’t come without risk. There is always a chance of loss.

Go to stockdissector.com

Thursday, February 18, 2016

Wednesday, February 17, 2016

Financial Thought of the Day February 17, 2016: It’s About the Fundamentals


When you buy shares of a stock you effectively become a business owner. A good business will have growing demand for its products, keep costs to a minimum and generates cash for its owners. Any publicly traded business in your portfolio that doesn’t do these things should be re-evaluated.

Go to stockdissector.com

Tuesday, February 16, 2016

Financial Thought of the Day February 16, 2016: Investing Versus Speculation


Investors buy/sell financial instruments based on the underlying financials with the intention of holding for the long-term. Speculators are looking for a quick profit and see the financial markets as nothing more than a gambling casino.

Monday, February 15, 2016

Financial Thought of the Day February 15, 2016: Save for a Snowy Day


Always set aside some money for the proverbial “snowy days” in life such as a job loss, medical bills not covered by insurance, etc. It pays to have the equivalent of 6-12 months of personal expenses set aside in a savings account.


Friday, February 12, 2016

Financial Thought of the Day February 12, 2016: Beware of Frothy Markets


Extreme bullish markets produce stocks with high valuations, which can correct in a major way when market sentiments turn sour.

Go to stockdissector.com

Thursday, February 11, 2016

Financial Thought of the Day February 11, 2016: Stock Market Volatility Creates Opportunity

The year 2016 proved a volatile year for the stock market. Long-term minded investors should seize this opportunity to buy good quality publicly traded companies on the cheap.

Go to stockdissector.com

Wednesday, February 10, 2016

Financial Thought of the Day February 10, 2016: Money Provides Options Other Than The Opportunity to Buy Luxury


Remember money can provide options other than the opportunity to buy luxury items. It can purchase the peace of mind of not having worry about being broke right before payday.


Tuesday, February 9, 2016

Financial Thought of the Day February 9, 2016: Be Prepared for Storms of Life


Having an emergency fund will help prepare you for the storms of life. It pays to have one year’s of expenses.


Monday, February 8, 2016

Financial Thought of the Day February 8, 2016: Papaw Wisdom


My grandfather once said, "You can’t make $50 a day and spend $60."


Friday, February 5, 2016

Financial Thought of the Day February 5, 2016: The Formula for Future Value of a Single Amount


This week I talked about what compound interest can do for a single amount over a period of time. The formula for the future value of a single amount is FV = (1 + i)^N where i is interest and n is the number of compounding periods. In my illustration involved annual compounding.
A table for the various rates of returns for a $1,000 can be found below:


Go to stockdissector.com

Thursday, February 4, 2016

Financial Thought of the Day February 4, 2016: Berkshire Hathaway: The Ultimate Example of Compound Growth


Building wealth is a function of amount invested, the rate of return and time. Warren Buffett has ran Berkshire Hathaway (NYSE: BRK-A) (NYSE: BRK-B) for over fifty years. From 1964–2014 the company’s class A stock returned 21.6% compounded annually. Here’s what $1,000 would have done with that rate of growth over time in the table below. It takes investment genius to achieve this and this rate is definitely not guaranteed and few people could probably achieve this.

$1,000 Amount
Time
Rate
Amount After Compounding
10 Years
21.6%
$7,068.64
20 Years
21.6%
$49,965.65
30 Years
21.6%
$353,189.06
40 Years
21.6%
$2,496,565.69
50 Years
21.6%
$17,647,319.43

A similar table to the one found above for different compound growth rates can be found here:


William Bias (stockdissector) owns shares in Berkshire Hathaway Class B

Wednesday, February 3, 2016

Financial Thought of the Day February 3, 2016: Here’s What 15% Can Get You Over Time


Building wealth is a function of amount invested, the rate of return and time. Yesterday, I illustrated how much 10%, which represented the potential return of an index mutual fund, can get you over time given a $1,000 investment. Today, I will illustrate what 15% can do for a single $1,000 over time. It takes a little investing skill by investing in solid publicly traded companies, risk taking and luck to get these returns and is definitely not guaranteed (table below).

$1,000 Amount
Time
Rate
Amount After Compounding
10 Years
15%
$4,045.56
20 Years
15%
$16,366.54
30 Years
15%
$66,211.77
40 Years
15%
$267,863.55
50 Years
15%
$1,083,657.44


Tuesday, February 2, 2016

Financial Thought of the Day February 2, 2016: Here’s What 10% Can Get You


Building wealth is a function of amount invested, the rate of return and time. Yesterday, I illustrated how much 2%, which represents a risk free rate of return, can get you over time given a $1,000 investment. Today, I will illustrate what 10% will get you. You have to take a little more risk to get this rate of return by investing in a mutual fund and there is no guarantee you will get it (see table below).

$1,000 Amount
Time
Rate
Amount After Compounding
10 Years
10%
$2,593.74
20 Years
10%
$6,727.50
30 Years
10%
$17,449.40
40 Years
10%
$45,259.26
50 Years
10%
$117,390.85


Monday, February 1, 2016

Financial Thought of the Day February 01, 2016: Here’s What 2% Can Do For Your Money Over Time


Building wealth is a function of amount invested, the rate of return and time. Here’s what 2% (the rate for a 10 year Treasury Note) can do for you over time:

$1,000 Amount
Time
Rate
Amount After Compounding
10 Years
2%
$1,218.99
20 Years
2%
$1,485.95
30 Years
2%
$1,811.36
40 Years
2%
$2,208.04
50 Years
2%
$2,691.59

Note: William Bias (stockdissector) does not own any Treasury Notes.

Go to stockdissector.com

Friday, January 29, 2016

Financial Thought of the Day January 29, 2016: Debt = Interest Expense


Adding to your credit card balance unnecessarily creates an interest expense burden that people shouldn’t need to shoulder. In fact, debt should be avoided altogether if possible.

Go to stockdissector.com