stock selection

Our take on the investing, financial, & economic themes of the day

Using Free Cash Flow Yield to Evaluate Stocks

21 December, 2015 by Ben O'Brien in Commentary
I wrote recently about the problems of relying too much on the P/E ratio for investment decisions. So what should you look to instead? There are lots of important fundamental factors to consider, but one particularly useful measure is the Free Cash Flow Yield. It is a measure of how much extra ... read more...

The Problem with PE Ratios

3 December, 2015 by Ben O'Brien in Commentary
One of the first things new investors tend to learn is the PE ratio. It is a very quick measure of a company’s relative valuation. To get the PE ratio you simply divide the current share price by one year’s earnings per share. The ratio tells you how much you will pay for each ... read more...

The Wisdom of Buffett’s “Too Hard” Bin

16 June, 2015 by Ben O'Brien in Commentary
Regular readers of this blog will have to forgive me for writing about Warren Buffett so much recently, but I recently read his excellent biography by Roger Lowenstein, and so I have Buffett on the brain. One Buffett anecdote that resonated with me was his comment that on his desk he had an ... read more...

Should You “Buy What You Know”?

13 February, 2015 by Ben O'Brien in Commentary
The legendary mutual fund manager Peter Lynch wrote a popular investment book called One Up on Wall Street in which he argued that individual investors can use common sense and everyday experience (along with some hard work and diligence) to find great investment ideas. The book is a convincing ... read more...

The One Chart that Describes All the Potential Risks in 2015

6 January, 2015 by Ben O'Brien in Commentary
The biggest threats to the economy and the markets tend to be the ones that pop up out of nowhere. In 2014 while everyone was worried about interest rates rising in the U.S., another totally unexpected threat arose in the global economy, the sharp drop in oil prices. This is what former ... read more...