"You do not need to know precisely what is happening, or exactly where it is all going. What you need is to recognize the possibilities and challenges offered by the present moment, and to embrace them with courage, faith and hope." - Thomas Merton
Wednesday 31 January 2018
Tuesday 30 January 2018
Monday 29 January 2018
Quote for the day
"Don't waste your energy trying to convince people to understand you. Your time is too valuable to try to prove yourself to people." - Joel Osteen
Sunday 28 January 2018
Quote for the day
"To love means loving the unlovable. To forgive means pardoning the unpardonable. Faith means believing the unbelievable. Hope means hoping when everything seems hopeless." - Gilbert K. Chesterton
Saturday 27 January 2018
Quote for the day
"Have you ever felt trapped in circumstances, then discovered that the only trap was your own lack of vision, lack of courage, or failure to see that you had better options?" - Nick Vujicic
Friday 26 January 2018
Quote for the day
"I think risk is important. I don't care if it's a great financial risk or a physical risk. You only get out of something what you put into it and the fact that you are willing to risk something means that you are going to get a lot more out of it." - Yvon Chouinard
Thursday 25 January 2018
Quote for the day
“The biggest thing about making money is TIME. You don’t have to be particularly smart; you just have to be patient.” - Warren Buffett
Wednesday 24 January 2018
Quote for the day
"What we love determines what we seek. What we seek determines what we think and do. What we think and do determines who we are — and who we will become." - Dieter F. Uchtdorf
Tuesday 23 January 2018
Monday 22 January 2018
Sunday 21 January 2018
Fisher's famous "Fifteen Points to Look for in a Common Stock"
All good principles are timeless, and Fisher's famous "Fifteen Points to Look for in a Common Stock" from Common Stocks and Uncommon Profits remain as relevant today as when they were first published. The 15 points are a qualitative guide to finding superbly managed companies with excellent growth prospects. According to Fisher, a company must qualify on most of these 15 points to be considered a worthwhile investment:
1. Does the company have products or services with sufficient market potential to make possible a sizable increase in sales for at least several years? A company seeking a sustained period of spectacular growth must have products that address large and expanding markets.
2. Does the management have a determination to continue to develop products or processes that will still further increase total sales potentials when the growth potentials of currently attractive product lines have largely been exploited? All markets eventually mature, and to maintain above-average growth over a period of decades, a company must continually develop new products to either expand existing markets or enter new ones.
3. How effective are the company's research-and-development efforts in relation to its size? To develop new products, a company's research-and-development (R&D) effort must be both efficient and effective.
4. Does the company have an above-average sales organization? Fisher wrote that in a competitive environment, few products or services are so compelling that they will sell to their maximum potential without expert merchandising.
5. Does the company have a worthwhile profit margin? Berkshire Hathaway's BRK.B vice-chairman Charlie Munger is fond of saying that if something is not worth doing, it is not worth doing well. Similarly, a company can show tremendous growth, but the growth must bring worthwhile profits to reward investors.
6. What is the company doing to maintain or improve profit margins? Fisher stated, "It is not the profit margin of the past but those of the future that are basically important to the investor." Because inflation increases a company's expenses and competitors will pressure profit margins, you should pay attention to a company's strategy for reducing costs and improving profit margins over the long haul. This is where the moat framework we've spoken about throughout the Investing Classroom series can be a big help.
7. Does the company have outstanding labor and personnel relations? According to Fisher, a company with good labor relations tends to be more profitable than one with mediocre relations because happy employees are likely to be more productive. There is no single yardstick to measure the state of a company's labor relations, but there are a few items investors should investigate. First, companies with good labor relations usually make every effort to settle employee grievances quickly. In addition, a company that makes above-average profits, even while paying above-average wages to its employees is likely to have good labor relations. Finally, investors should pay attention to the attitude of top management toward employees.
8. Does the company have outstanding executive relations? Just as having good employee relations is important, a company must also cultivate the right atmosphere in its executive suite. Fisher noted that in companies where the founding family retains control, family members should not be promoted ahead of more able executives. In addition, executive salaries should be at least in line with industry norms. Salaries should also be reviewed regularly so that merited pay increases are given without having to be demanded.
9. Does the company have depth to its management? As a company continues to grow over a span of decades, it is vital that a deep pool of management talent be properly developed. Fisher warned investors to avoid companies where top management is reluctant to delegate significant authority to lower-level managers.
10. How good are the company's cost analysis and accounting controls? A company cannot deliver outstanding results over the long term if it is unable to closely track costs in each step of its operations. Fisher stated that getting a precise handle on a company's cost analysis is difficult, but an investor can discern which companies are exceptionally deficient--these are the companies to avoid.
11. Are there other aspects of the business, somewhat peculiar to the industry involved, which will give the investor important clues as to how outstanding the company may be in relation to its competition? Fisher described this point as a catch-all because the "important clues" will vary widely among industries. The skill with which a retailer, like Wal-Mart WMT or Costco COST, handles its merchandising and inventory is of paramount importance. However, in an industry such as insurance, a completely different set of business factors is important. It is critical for an investor to understand which industry factors determine the success of a company and how that company stacks up in relation to its rivals.
1. Does the company have products or services with sufficient market potential to make possible a sizable increase in sales for at least several years? A company seeking a sustained period of spectacular growth must have products that address large and expanding markets.
2. Does the management have a determination to continue to develop products or processes that will still further increase total sales potentials when the growth potentials of currently attractive product lines have largely been exploited? All markets eventually mature, and to maintain above-average growth over a period of decades, a company must continually develop new products to either expand existing markets or enter new ones.
3. How effective are the company's research-and-development efforts in relation to its size? To develop new products, a company's research-and-development (R&D) effort must be both efficient and effective.
4. Does the company have an above-average sales organization? Fisher wrote that in a competitive environment, few products or services are so compelling that they will sell to their maximum potential without expert merchandising.
5. Does the company have a worthwhile profit margin? Berkshire Hathaway's BRK.B vice-chairman Charlie Munger is fond of saying that if something is not worth doing, it is not worth doing well. Similarly, a company can show tremendous growth, but the growth must bring worthwhile profits to reward investors.
6. What is the company doing to maintain or improve profit margins? Fisher stated, "It is not the profit margin of the past but those of the future that are basically important to the investor." Because inflation increases a company's expenses and competitors will pressure profit margins, you should pay attention to a company's strategy for reducing costs and improving profit margins over the long haul. This is where the moat framework we've spoken about throughout the Investing Classroom series can be a big help.
7. Does the company have outstanding labor and personnel relations? According to Fisher, a company with good labor relations tends to be more profitable than one with mediocre relations because happy employees are likely to be more productive. There is no single yardstick to measure the state of a company's labor relations, but there are a few items investors should investigate. First, companies with good labor relations usually make every effort to settle employee grievances quickly. In addition, a company that makes above-average profits, even while paying above-average wages to its employees is likely to have good labor relations. Finally, investors should pay attention to the attitude of top management toward employees.
8. Does the company have outstanding executive relations? Just as having good employee relations is important, a company must also cultivate the right atmosphere in its executive suite. Fisher noted that in companies where the founding family retains control, family members should not be promoted ahead of more able executives. In addition, executive salaries should be at least in line with industry norms. Salaries should also be reviewed regularly so that merited pay increases are given without having to be demanded.
9. Does the company have depth to its management? As a company continues to grow over a span of decades, it is vital that a deep pool of management talent be properly developed. Fisher warned investors to avoid companies where top management is reluctant to delegate significant authority to lower-level managers.
10. How good are the company's cost analysis and accounting controls? A company cannot deliver outstanding results over the long term if it is unable to closely track costs in each step of its operations. Fisher stated that getting a precise handle on a company's cost analysis is difficult, but an investor can discern which companies are exceptionally deficient--these are the companies to avoid.
11. Are there other aspects of the business, somewhat peculiar to the industry involved, which will give the investor important clues as to how outstanding the company may be in relation to its competition? Fisher described this point as a catch-all because the "important clues" will vary widely among industries. The skill with which a retailer, like Wal-Mart WMT or Costco COST, handles its merchandising and inventory is of paramount importance. However, in an industry such as insurance, a completely different set of business factors is important. It is critical for an investor to understand which industry factors determine the success of a company and how that company stacks up in relation to its rivals.
12. Does the company have a short-range or long-range outlook in regard to profits? Fisher argued that investors should take a long-range view, and thus should favor companies that take a long-range view on profits. In addition, companies focused on meeting Wall Street's quarterly earnings estimates may forgo beneficial long-term actions if they cause a short-term hit to earnings. Even worse, management may be tempted to make aggressive accounting assumptions in order to report an acceptable quarterly profit number.
13. In the foreseeable future will the growth of the company require sufficient equity financing so that the larger number of shares then outstanding will largely cancel the existing stockholders' benefit from this anticipated growth? As an investor, you should seek companies with sufficient cash or borrowing capacity to fund growth without diluting the interests of its current owners with follow-on equity offerings.
14. Does management talk freely to investors about its affairs when things are going well but "clam up" when troubles and disappointments occur? Every business, no matter how wonderful, will occasionally face disappointments. Investors should seek out management that reports candidly to shareholders all aspects of the business, good or bad.
15. Does the company have a management of unquestionable integrity? The accounting scandals that led to the bankruptcies of Enron and WorldCom should highlight the importance of investing only with management teams of unquestionable integrity. Investors will be well-served by following Fisher's warning that regardless of how highly a company rates on the other 14 points, "If there is a serious question of the lack of a strong management sense of trusteeship for shareholders, the investor should never seriously consider participating in such an enterprise."
13. In the foreseeable future will the growth of the company require sufficient equity financing so that the larger number of shares then outstanding will largely cancel the existing stockholders' benefit from this anticipated growth? As an investor, you should seek companies with sufficient cash or borrowing capacity to fund growth without diluting the interests of its current owners with follow-on equity offerings.
14. Does management talk freely to investors about its affairs when things are going well but "clam up" when troubles and disappointments occur? Every business, no matter how wonderful, will occasionally face disappointments. Investors should seek out management that reports candidly to shareholders all aspects of the business, good or bad.
15. Does the company have a management of unquestionable integrity? The accounting scandals that led to the bankruptcies of Enron and WorldCom should highlight the importance of investing only with management teams of unquestionable integrity. Investors will be well-served by following Fisher's warning that regardless of how highly a company rates on the other 14 points, "If there is a serious question of the lack of a strong management sense of trusteeship for shareholders, the investor should never seriously consider participating in such an enterprise."
Source: www.news.morningstar.com
Quote for the day
"Success, which is something so simple in the end, is made up of thousands of things, we never fully know what." - Rainer Maria Rilke
Saturday 20 January 2018
Quote for the day
"The standard of living of the common man is higher in those countries which have the greatest number of wealthy entrepreneurs." - Ludwig von Mises
Friday 19 January 2018
Quote for the day
"The truly educated can listen to any view without losing their temper or self-confidence." - Robert Frost
Thursday 18 January 2018
Quote for the day
"We've learned how to destroy, but not to create; how to waste, but not to build; how to kill men, but not how to save them; how to die, but seldom how to live." - Omar N. Bradley
Wednesday 17 January 2018
Quote for the day
"We need to be reminded more than we need to be instructed." - Gilbert K. Chesterton
Tuesday 16 January 2018
Quote for the day
"The first step in solving a problem is admitting there is a problem to be solved." - Pete Seeger
Monday 15 January 2018
Quote for the day
"Things never happen on accident. They happen because you have a vision, you have a commitment, you have a dream." - Oscar de la Renta
Sunday 14 January 2018
Quote for the day
"An emotion is only an emotion. It's just a small part of your whole being. You are much more than your emotion. An emotion comes, stays for a while, and goes away, just like a storm. If you're aware of that, you won't be afraid of your emotions." - Nhat Hanh
Saturday 13 January 2018
Quote for the day
"Whenever you make a mistake or get knocked down by life, don't look back at it too long. Mistakes are life's way of teaching you. Your capacity for occasional blunders is inseparable from your capacity to reach your goals. No one wins them all, and your failures, when they happen, are just part of your growth. Shake off your blunders. How will you know your limits without an occasional failure? Never quit. Your turn will come." - Og Mandino
Friday 12 January 2018
Quote for the day
"When you want to help people, you tell them the truth. When you want to help yourself, you tell them what they want to hear." - Thomas Sowell
Thursday 11 January 2018
Wednesday 10 January 2018
Tuesday 9 January 2018
Quote for the day
"Moral principles do not depend on a majority vote. Wrong is wrong, even if everybody is wrong. Right is right, even if nobody is right." - Fulton J. Sheen
Monday 8 January 2018
Quote for the day
"When you complain, you make yourself a victim. Leave the situation, change the situation or accept it, all else is madness." - Eckhart Tolle
Sunday 7 January 2018
Quote for the day
"Pain from problems and disappointments, etc., is inevitable in life, but suffering is a choice determined by whether you choose to compare your experience and pain to something better and therefore feel unlucky and bitter or to something worse and therefore feel lucky and grateful!" - Viktor E. Frankl
Saturday 6 January 2018
Quote for the day
"Action without intelligence is a form of insanity, but intelligence without action is the greatest form of stupidity in the world." - Charles Kettering
Friday 5 January 2018
Quote for the day
"A decision is made with the brain. A commitment is made with the heart. Therefore, a commitment is much deeper and more binding than a decision" - Nido R Qubein
Thursday 4 January 2018
Quote for the day
"The purpose of information is not knowledge. It is being able to take the right action." - Peter Drucker
Wednesday 3 January 2018
Quote for the day
"Life has three rules: Paradox, Humor, and Change. - Paradox: Life is a mystery; don't waste your time trying to figure it out. - Humor: Keep a sense of humor, especially about yourself. It is a strength beyond all measure - Change: Know that nothing ever stays the same." - Dan Millman
Tuesday 2 January 2018
Quote for the day
"As you become comfortable with uncertainty, infinite possibilities open up in your life. It means fear is no longer a dominant factor in what you do and no longer prevents you from taking action to initiate change." - Eckhart Tolle
Monday 1 January 2018
Quote for the day
"Write it on your heart that every day is the best day in the year." - Ralph Waldo Emerson
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