Benjamin Graham Intrinsic Value Formula

A Look At How the Father of Value Investing Calculated the Intrinsic Value of an Ordinary Share of Common Stock Benjamin Graham, the rich investor, professor, and mentor to Warren Buffett, once proposed a quick back-of-the-envelope intrinsic value formula for investors to determine if their stocks were at least somewhat rationally priced.  He encouraged investors [...]

from Joshua Kennon

The Fortune 500+ Web App Rules

This morning, I bought an annual subscription to the Fortune 500+ web app, which cost only $9 for the year.  You can use it to sort and filter the 1000 companies in the Fortune list, viewing by sector or industry, profit margins, return on assets, return on equity, sales, absolute profits, and more.  It’s really [...]

from Joshua Kennon

You Can’t Always Rely on Reported P/E Ratio for Stocks

The P/E Ratio Can Be Overstated or Understated Depending Upon Accounting Issues and Temporary One-Time Gains or Losses It isn’t enough to pull up a stock quote and check the p/e ratio of a stock.  Last night, I was sitting in bed, reading through the transcript of The Coca-Cola Company conference call and watching interviews [...]

from Joshua Kennon

I’m Having This Time Value of Money Future Value Chart Framed and Put at Headquarters

I’m having this chart framed and put on display. I’m also thinking about having index-card reproductions made to hand out as Christmas cards each year. It is appropriate, I think.

from Joshua Kennon

Stock Dividends Are Not Income – They Are a Balance Sheet Reclassification for Accounting Purposes

The trust fund book I’m reading is talking about how it is extremely important to define “income” and “principal” in any trust fund documents.  The example is as follows: Tom is the income beneficiary of a trust.  He is to receive all income until he reaches age 35.  At that time, the trust is distributed [...]

from Joshua Kennon

A Deeper Look at Gross Profit and Gross Profit Margin

As I explained in my investing lesson on how to read an income statement over at About.com, a division of The New York Times, gross profit and the gross profit margin are both important because they determine how much money out of each dollar sold is available for salaries, benefits, advertising, expansion, debt reduction, and [...]

from Joshua Kennon

The McDonald’s Monopoly $1,000,000 Prize Will Cost the Company Pennies on the Dollar

The Monopoly game at McDonald’s has returned.  The top prize for collecting Boardwalk and Park Place is a cool $1,000,000 in cash.  The winner will not collect that money upfront.  Instead, he or she will be mailed a check for $50,000 each year for the next 20 years, without interest.  This steady payment is known [...]

from Joshua Kennon

Banks Brace for New Basel III Regulations

According to The Wall Street Journal and The Financial Times, regulators from 27 countries are meeting in Basel, Switzerland right now to hammer out tough new banking rules designed to prevent another catastrophic global meltdown like the one that occurred in 2008.  These new rules, called Basel III because these are the third incarnation of [...]

from Joshua Kennon

I’m Working on a New Book

I turn down several book contracts a year and have for probably the past 5 or 6 years.  Despite having one of the largest investing audiences online, other than my Penguin book contract in 2006, I avoid the commitments because I don’t like being tied to deadlines (even though I tend to work faster than [...]

from Joshua Kennon

Why Income Inequality Will Always Exist as Part of the Post-Industrial Revolution Global Economy

First: Before we begin, the education system in the United States over the past few decades has done such a poor job teaching basic logic that by virtue of the headline alone, it is statistically likely that you have already made a decision about whether or not this short essay on pay inequality is “good” [...]

from Joshua Kennon

A Discussion on Pension Costs

It’s nearly 4 in the morning and I’m up reading political blogs; happened to come across http://cognidissidence.blogspot.com/ and enjoyed reading it. This particular entry is way off base from a financial perspective and since the author seems to be working to expose problems in government, I thought I’d take the time to explain why if [...]

from Joshua Kennon

How to Read an Income Statement Updated

I spent last week rewriting and expanding the How to Read an Income Statement feature at the About.com / New York Times Investing for Beginners site.  It ended up being roughly 43 pages and nearly 20,000 words so it was a bit more than I anticipated but it should be worth it!

from Joshua Kennon

Abercrombie & Fitch Financial Statements

These financial statements are for reference purposes when reading my investing lesson on how to analyze an income statement at the Investing for Beginners About.com site.  I’m working with the network on trying to figure out how to integrate them directly into the page but the length of data seems to be a problem.  Sorry [...]

from Joshua Kennon