August 7, 2009 by Joe Ponzio

On the heels of yesterday’s article, I received an e-mail from a friend this afternoon asking me about my thoughts on inventory turns and profit margins. To paraphrase: The math doesn’t work right, as the inventory turns don’t affect the profit margins each year. I didn’t do a good job…

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March 19, 2008 by Joe Ponzio

Folks, we’re in a recession right now. To paraphrase Warren Buffett, this may not be a recession according to the dictionary definition of the word; still, if you ask the question from a common sense perspective, the answer is painfully clear. During a recession, unemployment generally rises, production slows, spending…

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November 2, 2007 by Joe Ponzio

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…

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August 24, 2007 by Joe Ponzio

Interestingly enough, quick asked a question that was going to be the topic for today. When does the discounted cash flow model work? When does it not? Is this a method that can be used for all businesses at all times? The short answer is: The discounted cash flow method…

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August 17, 2007 by Joe Ponzio

When valuing a business, you discount the expected future cash back to today to get an idea of what the company is worth. Of course, predicting future cash flows is part art, part science. Piled on top of that is the fact that the discount rate you use greatly affects…

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July 18, 2007 by Joe Ponzio

Throughout 1988 and 1989, Warren Buffett acquired more than $1 billion of Coca-Cola (KO) stock. At the time, Wall Street thought he was downright crazy. After all, Wall Street scrutinized the purchase and deduced that Buffett has paid way too much for earnings and the stock price was high-having run…

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July 11, 2007 by Joe Ponzio

Conventional wisdom on Wall Street says that you should definitely reinvest any dividends you get. Then again, look how well Wall Street’s conventional wisdom has done for you over the years. If you are blindly speculating in stocks or putting money into Wall Street’s mutual funds, reinvesting your dividends may…

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July 10, 2007 by Joe Ponzio

If you bought Coca-Cola (ticker: KO) on January 2, 1996 and held it through December 29, 2006, you would have had a 10% gain, or about 0.92% average annual return for ten years (when factoring in dividends). Sure, you would have had some big ups and downs, but stock prices…

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