hansenasset To find how many years an amount will take to double at a given growth rate, simply divide 72 by said growth rate. So at 7%, $100 should double in 10 years. 72 / 7 ~= 10 When I look at a company with Value Line or roic.ai, I want the revenues to have at … Read more
The S&P 500 index is put out by the rating agency Standard and Poor’s and is comprised of 500 large cap U.S. companies. You can find a current list of companies on Wikipedia. When someone says “the market” they are often referring to the S&P 500. Other popular indices include the NASDAQ, which is more … Read more
Margin of Safety is a term popularized by Benjamin Graham and Warren Buffett. It means that once you’ve valued a stock, you should take another 20-50% off just to be on the safe side. For example, if you think a stock is worth $100 a share, then you should lower your price target to $50-$80. … Read more
PE Deflator Spreadsheet (Go to ‘File -> Make a copy’ to edit) WARNING: This is just an educational tool. It’s been simplified to ignore share dilution, dividends, and a million other variables. When you’re looking at a growth stock, it’s important to understand what assumptions are built into the stock price. If a company currently … Read more
I should start off by saying that every investor is a mixture of the two. It’s like saying a team is a defensive team vs an offensive team. Every team has to play both. The designation has to do with their speciality. There are a lot of reasons a stock’s price can go up. But … Read more
Utility is an economic term meaning to derive value from. I derive value from this tuna sandwich. Meaning, I enjoy eating it. End-user just means that I’m the person who actually uses the tuna sandwich. As opposed to the person who sold me the sandwich. Stocks have an end-user utility too, although that utility may … Read more
If you’ve ever watched a political debate, then you’ve probably heard someone say “it’s basic Econ 101.” “If you increase the minimum wage, then there’ll be less jobs… It’s basic Econ 101.” “Welfare encourages people not to work… It’s basic Econ 101.” “If you cut taxes, it’ll increase jobs… It’s basic Econ 101.” Those statements … Read more
Airlines are terrible businesses. In some industries, like the railroads, you have only a few competitors and they kind of play nice with each other. That may result in the occasional lawsuit, but it keeps the economics of the railroad industry lucrative. With airlines however, the few competitors just beat the living snot out of … Read more
Bonds are for wealth preservation and stocks are for wealth appreciation. If you’re decades away from needing the money (i.e. retirement) then you’re not being safe by investing in bonds. You’re just being foolish. Reason being, stocks will beat bonds in the long run. Written in 2015
Finance measures risk as volatility. But to an investor with a long time horizon, i.e. retiring in 30 years, volatility can create buying opportunities. It’s only for those with short time horizons, i.e. paying for child’s tuition soon, that volatility poses a threat. So it’s not the volatility that creates risk, it’s the short time … Read more