November 7, 2007 by Joe Ponzio

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…

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October 16, 2007 by Joe Ponzio

The value of a company lies entirely in the future, and it is our job to predict that future with a degree of accuracy and confidence. To choose a growth rate, we must delve into the inner workings of a company and see how quickly it will grow internally. Enter…

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August 30, 2007 by Joe Ponzio

Perhaps you’ve noticed that I switch between discount rates. Maybe you’ve seen me throw the past out the window and use future owner earnings assumptions that differ from past median growth rates. Or, you may have noticed that I’ll use 8-year timeframes on some companies and 15 year timeframes on…

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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 7, 2007 by Joe Ponzio

If your business doesn’t have a moat, it is unpredictable at best. Can money be made in no-moat businesses? Absolutely-but it is a gamble at best. Ben Graham, Warren Buffett’s mentor and friend, stated: An investment operation is one which, upon thorough analysis, promises safety of principal and a satisfactory…

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August 2, 2007 by Joe Ponzio

Yesterday, a visitor brought up a couple of points regarding the analysis of Johnson & Johnson. It looks as though growth might be slowing based on the 2001-2006 owner earnings growth rate and he brought up a good point-is it a cause for concern?

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July 24, 2007 by Joe Ponzio

By now, you have determined what your desired rate of return is. Personally, I like to use 15%. At that rate, my money will double approximately every 5 years. Why 15%? Considering that I have to find the companies, analyze them, say “no” to most of them, and patiently wait…

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July 23, 2007 by Joe Ponzio

In Part I, we looked at Shareholder Equity as the first step in calculating the intrinsic value of a company. Then, we looked at Buffett’s owner earnings and further explored intrinsic value in Part II. When you buy stock, you are buying a piece of a business-usually, a small piece.…

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July 20, 2007 by Joe Ponzio

In Part I, we looked at Shareholder Equity as the first step in calculating the value of a company. Shareholder Equity essentially tells us how much our company is worth if it shut down operations, sold off its assets, paid its debts, and distributed the cash to the shareholders. Though…

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July 19, 2007 by Joe Ponzio

The Greater Fool Theory is a belief that you can buy a stock at any price and sell it to some other, bigger fool for a profit. In times of ever-increasing markets, this theory often shows itself to be true. Still, reality must come crashing down at some point. It…

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