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Tuesday, 25 June 2024

Age of Easy Money (full documentary)

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Friday, 14 June 2024

Supply Shocks and Stagflation

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Box: Supply Shocks and Stagflation If a supply shock is sufficiently large or persistent, it not only causes cost‑push inflation, but can no...

Inflation expectations

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  Inflation expectations Inflation expectations are the beliefs that households and firms have about future price increases. They are import...

Cost-push inflation

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Cost-push inflation Cost-push inflation occurs when the total supply of goods and services in the economy which can be produced (aggregate s...

Demand-pull inflation

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  Demand-pull inflation Demand-pull inflation arises when the total demand for goods and services (i.e. ‘aggregate demand’) increases to exc...

Causes of Inflation: demand-pull, cost-push and inflation expectations

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Causes of inflation The main causes of inflation can be grouped into three broad categories: demand-pull, cost-push, and inflation expectati...

Inflation

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Inflation is an increase in the prices of goods and services.  The most well-known indicator of inflation is the Consumer Price Index (CPI),...
Tuesday, 28 May 2024

High capex companies are usually bad investments as they rarely produce enough free cash flow

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Supermarket companies, in general have consistently spent more on capex than depreciation and produced very low free cash flow per share ...

How depreciation of assets can distort profit figures

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Depreciation is an expense that matches the cost of a fixed asset against the revenues it helps to produce.  The cost of an asset is spread...
Monday, 27 May 2024

Looking for possible investment candidates: Four simple rules when comparing FCFps with EPS

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  Summary Expenses and depreciation reduce profits.  Capex reduces FCF. When expenses are not expensed against revenues but considered as ca...

If free cash flow per share is consistently a lot lower than EPS, this is a warning sign.

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 The 2 main reasons for FCF being lower than a company's EPS are: 1.  Poor operating cash conversion 2.  High levels of investment in ne...

Quality companies turn most of their profits into free cash flow on a regular basis

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We can use free cash flow as a tool for checking the quality of a company's profits. The stock market has been littered with companies ...

Checking the safety of dividend payments

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Dividends are an important part of total returns from owning a share.   Dividends are a cash payment and therefore the company needs to have...
Sunday, 26 May 2024

When free cash flow may not be what it seems

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Free cash flow comes with a few caveats one need to be aware of. Besides calculating a company's free cash flow, one need to study its...
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Tuesday, 14 May 2024

CHECKLIST ON HOW TO VALUE SHARES

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BIGGEST RISK:  PAYING TOO MUCH The biggest risk you face to be a successful investor in shares is paying too much.    It is important to re...

Can quality be more important than price?

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Paying too much for a share can result in disappointing returns. No company, no matter how good, is a buy at any price. Share valuation is n...

The importance of growth

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If you are going to buy and own expensive shares, you must be very confident that high rates of growth can continue for a long time into the...

Using owner earnings to value shares: Setting a maximum price method

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Setting a maximum price and buying price for Company X shares Current cash profit per share 11.6 sen Divide by interest rate [inflation +3%]...

Using owner earnings to value shares: Earnings Power Value (EPV)

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 EPV gives an estimated value of a share if its current cash profits stay the same forever. Calculation: 1 Normalised or underlying trading...

Using owner earnings to value shares: Cash yield or Interest rate method

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This approach is very simple. Take the owner earnings or the cash profit per share and divide it by the current share price to get a cash in...