Intelligent Investments: Stock Day!

Tuesday, February 6, 2007

Stock Day!

The portfolio gained 0.46% today fueled mostly by big gains in some of my stocks with most issues heading higher. MRVC, PFSW, RAND, and TOA all had multi percentage gains. ARTX has continued to sink and has now given up most of its 15% of gains.

Energy was slightly lower today which mostly results for the lackluster mutual fund performance. In the coming days, I'll be selling more assets from the funds to have cash on hand to plow into existing stocks at buying opportunities or new issues that come to my attention.

3 comments:

Trading Goddess said...: Hello,

A Bears fan living in Colorado, eh?

;); February 8, 2007 at 12:06:00 PM PST
Mark said...: There are a very many of us. Too bad about the outcome. Where are you?; February 9, 2007 at 1:20:00 PM PST
QUALITY STOCKS UNDER FIVE DOLLARS said...: Sounds really scary; December 29, 2012 at 10:35:00 AM 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.