Dr. Paul W. Allen

Primary and Secondary Sources of Financial Numbers

A reader of my book, Choose Stocks Wisely, wrote me the other day and our e-mail conversation prompted this post. He was performing stock analysis on several companies and noticed that Finviz was reflecting a September 30, 2013 date for the most recent financial statement information available. He checked Yahoo Finance and found information was updated through December 31, 2013. I appreciated his note and it gives me opportunity to address an important subject, namely the difference between primary and secondary sources of financial statement information.

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March 12th, 2014|10Q and 10K, financial information|0 Comments

Spring Reminds Me of New Life

I’ll deviate today from my norm of investment talk. This has been a cold winter across the United States. Living in the south, I’ve not had to shovel snow like many of you. So, it’s been cold but I’m not complaining. Today, as I’m writing this post, blooms are popping out on bushes and trees, signaling the coming of spring. It is my favorite time of year, and it is an amazing thing to witness things coming alive before our very eyes.

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March 8th, 2014|Daylight Savings Time, God|6 Comments

Has The Stock Market Gotten Too High?

This is a question I’m receiving a lot lately and, frankly, a question worth pondering. I’ve never read about anyone who consistently (time and time again) has correctly predicted the end of bull or bear markets, or even consistently predicted the timing of temporary market corrections. Far be it from me to attempt to do so. Many people got out of the stock market near the lows of late 2008 and early 2009 and have missed one of the largest market increases since then in the history of the stock market. Emotions tend to make investors “react” and thereby “act” at just the wrong times.

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February 27th, 2014|Balance Sheet, bear market, bull market|5 Comments

Financial Companies Are Different

I’ve received several e-mails from readers of my book, Choose Stocks Wisely, who have observed that financial companies don’t have the subtotals for “current assets” and “current liabilities” on their balance sheets. These amounts are required as inputs by my Adjusted Floor Price Scorecard, specifically to complete Part A on testing for adequate liquidity.

Further, two of my finviz.com screening filters are the quick ratio and the current ratio. Both of these ratios require that the current asset and current liability amounts be available. Thus, banks and other financial companies will not satisfy my screening filters due to “lack of available data.” Keep in mind, to run a finviz screen which can potentially yield financial company stocks among non-financial company stocks, any filter that depends on a current/non-current balance sheet account breakout must be excluded as a filter.

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February 19th, 2014|Balance Sheet, current assets/current liabilities, financial companies|2 Comments

Financial Leverage and Risk

I talked this week about financial leverage during one of the college courses I’m teaching this semester. Financial leverage describes the use of debt financing as a means of levering earnings higher. Using debt financing is like using a crowbar on earnings. Indeed, when a company is experiencing profitability, it can enhance profits through the benefits of using debt to finance the assets used in operations.

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February 13th, 2014|Balance Sheet, earnings, Risk|2 Comments

Filing Financial Reports

If your experience is like mine, it seems that many things seem to pile up this time of year. We all have to either do our own taxes or get things together for them to be done by another. As a CPA, I simply can’t bring myself to having someone do my taxes for me although I get sorely tempted at times. Anyway, that April 15th deadline will be here before we know it.

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February 8th, 2014|10Q and 10K, financial information|2 Comments

I Thank God for You

As a Christian, I wish to acknowledge Jesus Christ when I’m talking about money, whether in my book or here at my blog. While I could get wordy in explanation, I’ll simply reference a single verse from I Corinthians 10:26 which states:

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January 31st, 2014|God, money|2 Comments

More Q & A

I’ve been blessed to experience wonderful friendships across my life. What a privilege to teach accounting to people in college over the years! I feel I’ve already made new friends via the website-enabled interaction that surrounds my book, “Choose Stocks Wisely.” Tonight, I will briefly share a very recent interesting question I received.

A reader of my book wrote the following:

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January 25th, 2014|Balance Sheet, Fundamental Analysis, Risk, Scorecard, Technical Analysis|2 Comments

The Lower the Risk, the Greater the Return

Risk, relative to investing, involves the possibility of losing some or all of the money invested. You’ve probably heard a basic premise in finance that a positive relationship exists between risk and return. That is, the greater the risk, the greater the potential return.

Simply put, to entice someone to invest in stocks over bonds, there has to be a greater expected payoff for investing in stocks. Bonds pay a certain rate of interest on a certain date and have a maturity date on which principal is to be repaid to the investor. There are no contracted payment terms for stock investors. Further, bondholders get paid back before stockholders receive anything if the underlying company goes bankrupt. In most bankruptcy cases, stockholders lose everything.

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January 18th, 2014|Balance Sheet, return/reward, Risk|0 Comments

No Place for Worldly Prosperity Doctrine in Christian Faith

I wrote a post back in October titled “Faith, Money and Investing in Stocks.”In that piece, I expressed that sometimes it seems that money can be an uncomfortable topic among Christians. We have all witnessed times when men and women have used God’s name to further personal worldly financial agendas. Also, we hear of some who profess faith in Christ today and preach that God wants everyone to be prosperous financially.

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January 8th, 2014|faith, God, Investing|6 Comments

About Dr. Paul W. Allen