Just wanted to wish everyone a Happy Thanksgiving! There is some interesting discussion going on in From Free Cash Flow To Earnings And Back. I just had to chime in.

Eat up. Lounge on the couch. And most importantly, have fun today!

Joe

I'm just getting caught up on the slew of comments here and I wanted to jump in again on this string over on What The Heck Is CROIC? There seems to be some confusion as to how free cash flow and GAAP earnings are related and I figured that this would be a good topic rather than let it get buried in the comments.

Do GAAP earnings drive free cash flow? Or, does free cash flow drive earnings?

Continue Reading From Free Cash Flow To Earnings And Back ››

When you sell stock short, you are essentially selling the stock today with the hopes of buying it back at a later date — and a lower price. We know that price follows value; still, management can do a lot to mess with the company's stock price and screw up your short position.

On a short position, your potential gains are fixed and your opportunity for loss is variable. Not a good way to make money. Let's look at a play that could go very bad.

Continue Reading Don't Go Short On Overpriced Companies! ››

Last week was a wild one for stock prices. The Dow lost 4.1% (threatening 13,000); the S&P 500 was down 3.7%; the NASDAQ lost 6.5%. It was crazy enough to make most investors quake in their boots.

I don't try to predict the direction of the markets on a daily basis; still, I hate to lose money. That's precisely why I like to sell options from time to time.

Continue Reading When People Are Happy, Protect Your Portfolio ››

When asked how to value financial institutions, I've always taken the cop out plea: They're outside my sphere of competence. What makes that statement extremely interesting is that I own and operate one and I still can't value them!

Robert posted one of the finest, most eloquent, and thoroughly researched answers to the question of why it is so difficult to value financial services companies.

Continue Reading Robert Explains Financial Institution Valuation ››

People are always asking me about "must read" books on business, investing, and other topics to help with their investing. One of the finest "Buffett" books on the market is Lawrence Cunningham's The Essays of Warren Buffett: Lessons for Corporate America. Unlike most books that try to pick apart Buffett's investment style, The Essays of Warren Buffett organizes Buffett's annual letters, reports, and other teachings in an easy-to-read format.

If you are not entirely, 100%, unwaveringly confident in your investing, buy this book. Let's take a look at what Buffett has said about Mr. Market.

Continue Reading Buffett On Mr. Market ››

Sorry all — the Chicago cold kicked my butt for two days. Let's get back to business. The Federal Reserve cut the federal funds rate by 25 basis points (0.25%) and pumped $41 billion of short-term reserves into the markets — the biggest liquidity infusion since September 11, 2001. One would have expected stocks to do anything but drop — the Dow having lost 360 points (2.6%) yesterday.

So...

Continue Reading Noise vs. News: Fed Meetings and Rates ››