Toddwenning

I am familiar with the philosophies and concepts but find myself struggling with more operative tasks when it comes to investing for example how to weight portfolio positions, how to allocate the next savings batch to existing or new positions etc. Hi CP, First, congratulations on taking a serious step toward improving your financial well-being. Jumping into the investing world can be intimidating, but it…

Great conversation. On the ROIC with or without goodwill topic, I think it's helpful to analyse both -- particularly if the company is growing by acquisition. I like running a three-year average spread between the two figures to determine whether or not the company is adding value by acquisition. If the spread is widening, that's usually a sign that the acquisitions aren't adding value. ROE…

Hi Ed, In Dorsey's book, The Five Rules for Successful Stock Investing, he provides the following metrics for moat evaluation FCF/Sales > 5% Net margin >15% ROE > 15% ROA > 6-7% These figures also need to be evaluated over time, however, as one year of strong results is not necessarily indicative of an economic moat. In addition, some qualitative assessment is necessary before confirming…

Hi CantEatValue, Nice post. Thanks for sharing it. I agree that capital allocation is often an under-appreciated trait -- most likely because the market is focused on the short-term whilst the benefits of good capital allocation are primarily realised in the longer-term. As you properly note, however, identifying a management team with good capital allocation skills can be challenging. For instance, as an outsider, it…

Very interesting, Ed. Nice work. It would also be helpful if you could set up alerts on the shares you follow to let you know if one of them trips one of the signals. For instance, if I'm looking to buy XYZ share and want to make a better entry point, I would get an alert if XYZ trips the "Golden Cross" line. Todd