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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August 14, 2007 by Joe Ponzio

In 1934, David Dodd and Benjamin Graham (Buffett’s teacher) wrote what would later be known as the foundation for value investing. Security Analysis knocked Wall Street for focusing on reported earnings and pointed the finger at the brokerages for dismissing their fiduciary responsibilities to clients, ultimately causing the Crash of…

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August 6, 2007 by Joe Ponzio

When a business changes your language, it likely has a good moat. Still, plenty of businesses have huge moats-and it is just a matter of understanding and uncovering them. Why do you need a moat? As Buffett says, to protect you from the guy who is going to come along…

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August 1, 2007 by Joe Ponzio

Hope. It can kill a portfolio. The more rational, cold, and calculated you are in your investing, the more confidence you can have in your portfolio. Each emotion you introduce only digs you further into the hole. You can hold a company because you love their products; but, you better…

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July 31, 2007 by Joe Ponzio

In his 1996 Letter To Shareholders of Berkshire Hathaway, Warren Buffett offered investors some pretty rational advice. I’ll take you through it, but let’s paraphrase his first words of caution: If you aren’t going to own individual stocks, buy index funds-not Wall Street’s mutual funds. Considering that most of Wall…

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July 30, 2007 by Joe Ponzio

I don’t like to write about the stock market. Why? It’s simple-whatever I write on Sunday night may very well be outdated by Monday’s lunch. It is much easier, safer, and more comfortable to buy stocks in wonderful businesses and ignore the stock market than it is to trade stocks,…

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July 16, 2007 by Joe Ponzio

Earnings. The Golden Child of Wall Street. You can’t talk about a “growing” company unless you qualify your rant with a discussion of earnings. In fact, earnings are the basis of nearly every one of Wall Street’s tests to determine whether a company is healthy and whether or not it…

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July 14, 2007 by Joe Ponzio

In Part 1, shortly after my brother, Ben Ponzio, won a World Series of Poker bracelet, I decided to draw a comparison between poker and investing. In reality, the similarities are scary. If you are great and one, you can (and should) be absolutely great at the other. The traits…

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July 12, 2007 by Joe Ponzio

One thing that Wall Street wants you to believe is that you have to get your money into the markets today-or you are never going to retire the way you hope to. Why? How else will they get you to buy their investments today? In reality, you have time. You…

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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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