Intelligent Investments: Beaten Down by RAND and ATRM

Tuesday, February 13, 2007

Beaten Down by RAND and ATRM

The portfolio finished up 0.30% today even though RAND was down more than 12% and ATRM was down over 8% on no news. Does someone know something I don't? I wonder. EMVL and TAIT also dragged down the portfolio.

COH performed well again up over 2%. Also, all mutual funds helped pull the weight of the portfolio north of zero.

I plan on some re balancing and elimination of some stocks as well as taking some profits on others. But where to put them? I think I would rather hold cash than an investment that I believe has reached its ceiling.

1 comment:

QUALITY STOCKS UNDER FOUR DOLLARS said...: The stocks in the post most certainly took a beating alright.; January 3, 2013 at 12:32:00 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.