Intelligent Investments: DOW Sets a New High

Wednesday, February 14, 2007

DOW Sets a New High

Soothing words from Ben Bernanke at the Federal Reserve about inflation sent the major indexes skyward as the DOW set a new high at 12,741.86. The portfolio finished the day up 0.72% basically in line with the major indexes (S&P: +0.76%, R2000: 0.18%, R1000: 0.77%).

ATRM recovered from its sell off the last two days gaining nearly 4%. EMVL continued it downward slide on me losing another 6.5% and is now down in the low 1.30's. COH finished up another 2.25% is near the $50 mark. My price target is somewhere in the low 60's for Coach. It is my flagship holding. PTG made a nice move up rising over 3% after a week and change of new movement.

Lets hope the portfolio finishes out the week strong.

1 comment:

QUALITY STOCKS UNDER FOUR DOLLARS said...: The dow jones is headed lower.; January 3, 2013 at 12:33:00 PM PST

Buffett's Value Formula (?)

Warren Buffett hasn't exactly published his formula for what he calls the intrinsic value of a company, but he has dropped a number of hints. He apparently multiplies estimated future earnings by a confidence margin between zero and a hundred percent (a bird in the bush being worth 0.5 birds in the hand, and all that; bush birds are the earnings you hope for, and hand birds are the earnings you're confident will materialize). He then compares these probable earnings with something he has total confidence in, by using a U.S. treasury yield as his discount rate. In calculator form it looks like this:

This calculator doesn't use fancier math than the original one did. Its advantage is that it forces you to be explicit about your earnings expectations. It also automatically provides you with a hard-headed investment strategy: always invest in government bonds, unless you can find something else you are confident will yield more cash.

One other hint that Buffett has dropped over the years is that he can estimate value in his head in about five seconds; so whatever he does he keeps it simple, slugger.