Balance Sheet | Choose Stocks Wisely

I Keep Hearing that the Stock Market Needs to Correct

Whether you invest in the stock market or just read the financial news, you are probably coming across opinions expressed with regard to an anticipated stock market correction. After all, the market has been on a steep incline pretty much since it bottomed in the spring of 2009 during the hard recession days. Couple that with the fact that there are a lot of people who don’t “feel” like their financial situations have improved all so much and the result is that the sustained rise in the stock market can leave a person scratching his/her head for an answer as to how it keeps going. […]

September 12th, 2014|Balance Sheet, common stock, Risk|0 Comments

Book Value and Market Value of Equity

The term book value is an accounting term that simply refers to the value(s) we record on the books for the various accounts tracked by a company. We track the values of the resources a company has to work with, namely assets. We track the values of the obligations assumed by the company to help support its asset structure, namely liabilities. The excess of the assets we record over the liabilities we record is the equity, the remainder that represents the net book value of the company. […]

August 30th, 2014|Balance Sheet, book value, Equity, market value|1 Comment

Another Choose Stocks Wisely Seminar at MSU

Mississippi State University graciously hosted the second Choose Stocks Wisely seminar at its Meridian campus on July 31, 2014. The first one was held back in December of 2013, shortly after my book, “Choose Stocks Wisely” was released. The seminar was held in the same room of the MSU facility as in December. […]

August 22nd, 2014|Balance Sheet, In The News, seminars|3 Comments

Whatever Happened to Building “Wealth?”

If you’ve owned stocks before and observed stock price behavior, you’ve realized how sensitive stock prices are to each successive quarterly earnings report. If the earnings report pleases the investment community, the stock usually reacts favorably and does so to the degree of momentary pleasure derived. The same can be said about the negative impact to stock prices when the earnings report disappoints market participants. […]

August 9th, 2014|Balance Sheet, earnings management, wealth management|0 Comments

Managing Debt; It’s Serious Business

I see so many corporate balance sheets of large companies today, even companies that pay dividends, which reflect liabilities (obligations) that significantly exceed assets (resources). When you exclude any intangible assets (goodwill too) from the asset base, the liabilities are that much greater than the assets. Of course, this means that the companies reflect negative equity since assets less liabilities leave equity. Typically long term debt forms a large portion of the company obligations in these situations where liabilities are greater than assets.

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August 2nd, 2014|Balance Sheet, financial leverage|2 Comments

It All Comes Down to Judgment

When you buy a stock, in the final analysis, it all comes down to your personal judgment. Since that is the bottom line to choosing a stock, how one goes about exercising that personal judgment is critical.

A favorable outcome has a “high probability” of resulting from following this little equation: Low price + high quality + solid outlook = favorable investment outcome

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June 28th, 2014|Balance Sheet, judgment, performance outlook|0 Comments

Pride Precedes a Fall

Truths found in Scripture (the Bible) apply to all aspects of life, including investing in common stocks. The Bible is very clear about God’s position toward the proud. It is referred to as an abomination to God in Proverbs 6:17. James 4:6 states that “God resists the proud, but gives grace to the humble.” In Proverbs 16:16, we read “How much better to get wisdom than gold! And to get understanding is to be chosen rather than silver.” Proverbs 16: 18, 19 tells us “Pride goes before destruction, And a haughty spirit before a fall. Better to be of a humble spirit with the lowly, Than to divide the spoil with the proud.”

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June 7th, 2014|Balance Sheet, God, stewardship|0 Comments

Don’t Drink the Kool-Aid

I want to continue a theme I started two weeks ago with a post titled “Making the Minimum Credit Card Payment” and followed-up last week with another post called “Choosing Weak Balance Sheets and High D/E Ratios.” I know some of you read the May 27 Bloomberg piece linked next because you wrote me about it this past week (Thank you for that):

http://www.bloomberg.com/news/2014-05-26/bad-credit-no-problem-as-shares-of-balance-sheet-bombs-rise-94-.html

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May 31st, 2014|Altman Z, Balance Sheet, common stock, stewardship|0 Comments

Choosing Weak Balance Sheets and High D/E Ratios

Think of this week’s post as somewhat of a follow-up to last week’s one called “Making the Minimum Credit Card Payment.” Al is someone who read my book, “Choose Stocks Wisely: A Formula That Produced Amazing Returns,” and he has written me from time to time. He has become a friend and our recent e-mail conversations led to today’s post. Al wondered at my thoughts over two issues he read about very recently, namely that weak balance sheets are expected by Goldman Sachs to outperform strong balance sheets looking ahead and that companies with high financial leverage ratios (debt to equity) have outperformed companies with lower debt to equity ratios. The following two links Al sent me are below:

http://www.valuewalk.com/2014/05/weak-balance-sheets-lead-market/

http://www.fatpitchfinancials.com/2256/total-debt-to-equity-ratio-backtest/

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May 24th, 2014|Balance Sheet, financial leverage|2 Comments

Making The Minimum Credit Card Payment

As you know, there is a lot of debt in our country and at all levels. Many credit card companies offer large amounts of credit to consumers so long as a relatively small minimum payment is made each month.

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May 17th, 2014|Balance Sheet, financial leverage|1 Comment