Good Reading from the week of January 20th 2014

Below are a collection of links that I have saved from my reading over the past week. Want a list of current EV/EBIT and EV/EBITDA ratios by industry?  Click here and you’ll see an updated list of industries with their EV/EBIT and EBITDA ratios as of this month.   The data is available as a download also from the link.  This comes from the great professor Damodaran. This article by Warren Buffet was dug up this week, and was written in 1999.  Remember 1999? That was the during the first internet stock market boom, and it is worthwhile to read what Buffet said during that time. Marc Andreessen wrote a good piece on Bitcoin and it is worth the time to read.  It is titled “Why Bitcoin Matters”, and lays out the idea that Bitcoin will be valuable as a payments protocol and not so much as a currency.  Even better, read a good response article on Andreessen’s piece. Have you ever wanted to go back 100+ years and read the articles and headlines in the papers, especially during the great depression and other historical time periods?  Well now you can, this great site has digitized newspapers going back many years.…

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Business Idea – Virtual Credit Card Number

From time to time I have business ideas, and recently I have captured my ideas and saving them in a folder on Evernote.  Like most good business ideas, I usually encounter a problem or inefficient process and think that there has to be a better way.  This particular idea I am writing about is something that I have encountered a few times in the past, but don’t think I will ever build a solution myself, so I’m putting it out there in case someone else can build a solution.  I would be interested in supporting anyone that has a good solution, but at this time I really only have a problem without a good solution. I’m calling this a Virtual Credit Card, but I’m not sure if that is correct.  The problem I encounter is that I have most of my bills paid through automated payments on each merchants website using my credit card.  I’m not the best at writing down each site that I have my credit card associated with the payment.  When the credit card expires, or a fraud occurred on my card, or I just change credit cards I have to go back to each website and…

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My Recent Experience with T-Mobile vs AT&T

My Recent Experience with T-Mobile vs AT&T

I’ve recently had to update my cell phone situation due to work and a change in the cell phone policy.  What I thought would be something quite easy, to move the phone number to my personal account, turned out to be something more complicated and ended up giving me an excuse to try T-Mobile.  Some people may read this account and think that I’m being harsh with AT&T, but I couldn’t receive what I wanted as an end result, and now AT&T opened up the door for an existing customer to move to a competitor. I’ve been intrigued by the moves that John Legere has made at T-Mobile and their bid to grow their subscriber base by attacking the big two U.S. wireless carriers, AT&T and Verizon.  Smartly, T-Mobile has listened to the largest customer complaints and have provided a service solution that alleviates a lot of these frustrating rules, limitations, and costs associated with being a subscriber at other wireless providers.  As you can see in the stock price, T-Mobile ($TMUS) has had a very large return over the past year.  Subscribers are moving to T-Mobile, but why? TMUS 1 Year Total Returns data by YCharts  T-Mobile listened to…

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Find the Metric

I was first introduced to the idea of finding the one (maybe two) most important metric that means the most for a particular company when I was attending SMU pursuing my MBA. I took a personal investing class that was taught by an adjunct professor and it was one of the top classes that I took. He didn’t cover the standard financial and portfolio theory that you hear in traditional finance classes. Instead, he ran his own investment outfit and used was in the investment group that owned the Texas Rangers with George W Bush. I learned a lot about investing from this class, and one of the things that has always stuck with me was to find the one metric that can be used to investigate a company (or industry). Some industries have a metric or two that is well-known, and can be used to measure the health of a company and potentially use to compare companies in the same industry. Sometimes you, as an investor, need to figure out what makes the company tick and come up with your own metric. Other times, a company will define a metric that is used in their Quarterly and Annual Reports.…

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Useful Links for week of January 13th 2014

It’s becoming more difficult to find investments that are worthy of buying at current prices, so in the meantime, it’s never a bad idea to keep reading useful information.  Below are a few hyperlinks that I have collected over the past week that I found interesting and/or useful that I thought would be useful to others. Stock Grader Stock Grader wanted to sort companies by the Quality of the company and their earnings.  The result was a simple sorting of companies using dividend adjusted book value and volatility to determine the quality of the company.  More simply, it’s just adding back dividends paid to book value, and determining the growth of book value over time along with the “lumpiness” of the earnings.  If the earnings growth was lumpy than a lower R-Squared value is returned, but if earnings growth was a steady than a higher R-Squared value resulted.  Based on these two calculations, a grade is assessed to each company and then ranked against the group.  For more information on the concept, see the About section of Stock Grader. This might be a good place to sort for some high quality companies and keep on a wait list until the stock…

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Investment Checklist Reading

I’ve collected a list of blog posts related to value investment checklists.  I thought I might aggregate all the posts that I have saved and put them in a blog post in case other investors would like to review other investor’s checklists’. Portfolio 14’s Investment Checklist Frank Voisin covers Bruce Berkowitz’s Investment Checklist Guest Post on Old School Value – 40 Point Checklist Ben Graham Investment Checklist  

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2013 Year End Review

2013 Year End Review

The year 2013 is now complete, and the stock market overall had a very good year and so did my investments.  I wanted to write-up a few of the mistakes that I made throughout the year and include a top 5 post list.  I’ve come to appreciate the publicizing of my mistakes because it requires that I review my decisions and to have a public record of the mistakes so that I do  not make the same mistakes again. Mistakes made during 2013 Do not attempt to invest in areas that are outside of your knowledge – I attempted to invest in a junior miner, but quickly realized that I wasn’t as comfortable with my analysis as I should have been.  I’m not sure if the investment was correct or not, but I do know that I wasn’t as comfortable holding the investment.  I sold out at a loss, but the lesson is that I shouldn’t have ventured into an industry that I didn’t have enough knowledge and conviction for investment purposes. Dilution is a killer – When investing in small and micro cap companies, shareholder dilution can kill your returns.  It is important to study the capital structure of…

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The Outsiders Book Review

The Outsiders: Eight Unconventional CEOs and Their Radically Rational Blueprint for Success by Will Thorndike I highly recommend reading this book if you have not done so.  A lot of investors have already read this book, so I’m a little late to the game however it’s a very useful look into the details of 8 CEOs whom have  provided exceptional returns over a long period of time for their investors.  Everyone is familiar with Warren Buffet and his amazing record of running Berkshire Hathaway, however, most will not recognize all of names of the CEOs that are covered in the book. General Cinema – Dick Smith Ralston Purina – Bill Stiritz The Washington Post Company – Katherine Graham Berkshire Hathaway – Warren Buffett General Dynamics – Bill Anders Capital Cities Broadcasting – Tom Murphy TCI – John Malone Teledyne – Henry Singleton The common attribute of all of the people included in the book is their outstanding capital allocation skills.  The CEO is responsible for determining the best possible use of cash and investments for the company that they run.  To obtain outstanding returns on investment a CEO must determine how to invest the resources of the firm appropriately and that’s…

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