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February 19, 2019

RSS Aswath Damodaran’s Musings on Markets

  • January 2019 Data Update 8: Dividends and Buybacks - Fact and Fiction February 8, 2019
    In my series of data posts, I had always planned to get to dividends and buybacks, the two mechanisms that companies have for returning cash to stockholders, at this point, but an op ed on buybacks by Senators Schumer and Sanders this week, in the New York Times, will undoubtedly make this post seem reactive. […]
  • January 2019 Data Update 7: Debt, neither poison nor nectar! February 5, 2019
    Debt is a hot button issue, viewed as destructive to businesses by some at one end of the spectrum and an easy value creator by some at the other. The truth, as is usually the case, falls in the middle. In this post, I will look not only at how debt loads vary across companies, […]
  • January 2019 Data Update 6: Profitability and Value Creation! January 27, 2019
    In my last post, I looked at hurdle rates for companies, across industries and across regions, and argued that these hurdle rates represent benchmarks that companies have to beat, to create value. That said, many companies measure success using lower thresholds, with some arguing that making money (having positive profits) is good enough and others […]
  • January 2019 Data Update 5: Hurdle Rates and Costs of Financing January 24, 2019
    In the last post, I looked at how to measure risk from different perspectives, with the intent of bringing these risk measures into both corporate finance and valuation. In this post, I will close the circle by converting risk measures into hurdle rates, critical in corporate finance, since they drive whether companies should invest or […]
  • January 2019 Data Update 4: The Many Faces of Risk! January 21, 2019
    I think that all investors would buy into the precept that investing in equities comes with risk, but that is where the consensus seems to end. Everything else about risk is contested, starting with whether it is a good or a bad, whether it should be sought out or avoided, and how it should be […]
  • Back to Class: A Teaching Manifesto! January 11, 2019
    I am convinced that each of us is granted moments of grace, where, if we are open to the possibility, we find out what we are meant to do with our lives. For me, one of those moments occurred in the second year of my MBA program at UCLA, when, cash poor, I decided to […]
  • January 2019 Data Update 3: Playing the Numbers Game! January 9, 2019
    Every year, for the last three decades, I have spent the first week of the year, looking at numbers. Specifically, as the calendar year ends, I download raw data on individual companies and try to decipher trends and patterns in the data. Over the years, the raw data has become more easily accessible and richer, […]
  • January 2019 Data Update 2: The Message from Bond Markets! January 7, 2019
    I must admit that I don't pay as much attention to fixed income markets, as I do to equity markets, other than to use numbers from the markets as inputs when I value companies or look at equity markets. This year, I decided to look at bond market movements, both in the sovereign bond and […]
  • January 2019 Data Update 1: A reminder that equities are risky, in case you forgot! January 3, 2019
    In bull markets, investors, both professional and amateur, often pay lip service to the notion of risk, but blithely ignore its relevance in both asset allocation and stock selection, convinced that every dip in stock prices is a buying opportunity, and soothed by bromides that stocks always win in the long term. It is therefore […]

RSS Dr David Kass commentary

  • Major Changes to Berkshire Hathaway’s Portfolio During Fourth Quarter, 2018 February 14, 2019
    After the market closed on February 14, Berkshire Hathaway released its SEC-13F filing for the quarter ending December 31, 2018. The largest changes were as follows: New positions: (1) Red Hat ($700 million)  (Note: Likely merger arbitrage – IBM to acquire Red Hat in late 2019 at $190 per share in cash.) (2) Suncor Energy […]
  • Charlie Munger on CNBC February 13, 2019
    Berkshire Hathaway Vice Chairman Charlie Munger (age 95) will be interviewed on CNBC on Friday, February 15 at 7:00 a.m.   On February 14, he will be answering shareholder questions at the Daily Journal annual meeting in Los Angeles.  Also, on February 14, Berkshire Hathaway will be releasing its SEC 13F filing after the close of […]
  • What Were the Changes to Berkshire Hathaway’s Portfolio in the Fourth Quarter? February 10, 2019
    After the market closes on Thursday, February 14, Berkshire Hathaway will release its SEC 13F filing for the fourth quarter of 2018.  Since the S&P 500 (total return) declined by 13.5% during the fourth quarter, it is very likely that Warren Buffett invested a substantial portion of Berkshire’s cash position of over $100 billion.  In […]
  • 5 Largest Companies by Market Capitalization January 8, 2019
    As of the market close on January 7, 2019, the five largest companies by market capitalization are: (1) Amazon – $797 billion (2) Microsoft – $784 billion (3) Alphabet (Google) – $746 billion (4) Apple – $702 billion (5) Berkshire Hathaway – $485 billion
  • Happy 95th Birthday, Charlie Munger! January 1, 2019
    Today is Berkshire Hathaway’s Vice Chairman Charlie Munger’s 95th birthday.  Happy Birthday, Charlie! (Berkshire Hathaway Chairman Warren Buffett is 88.) Happy New Year Everyone!
  • The Outlook For Technology Stocks December 27, 2018
    I am quoted in The Washington Post on “Tech Stocks Have Sold Off Sharply — Is It a Blip or Something More?”  “Momentum builds going up and it could suddenly build in the other direction,” said David Kass, a finance professor at the University of Maryland. He argued, however, that most of the sell reflects anxiety […]
  • Corporate Tax Cuts and Stock Buybacks December 15, 2018
    I am quoted in The Washington Post on corporate tax cuts and stock buybacks. “The tax cut was very worthwhile for business,” said David Kass, finance professor at the University of Maryland.  
  • Stocks To Watch In 2019 December 13, 2018
    I was interviewed in this Smith Brain Trust (University of Maryland) article on the 2019 outlook for the economy and stocks. THESE COMPANIES ARE POISED FOR EXCITEMENT IN 2019 Dec 10, 2018 Finance SMITH BRAIN TRUST – Like the big man in the North Pole, Maryland Smith’s David Kass spends the waning weeks of the year making a list […]
  • Microsoft Replaces Apple as Most Valuable Company December 5, 2018
    I am quoted in the Washington Post (December 2, 2018): “Technology and capitalism take their toll, said David Kass, finance professor at the University of Maryland. “Of the original 12 stocks in the Dow Jones industrial average in 1896, only General Electric survives today — just barely,” Kass said. And in time, “Apple and Microsoft […]

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how warren buffett measures profit performance

Measuring profit performance

November 16, 2014

In his 1977 letter to Berkshire Hathaway shareholders, Warren Buffett said that “most companies define ‘record’ earnings as a new high in earnings per share”. This measure is not appropriate in Mr Buffett’s views. “Since businesses customarily add from year to year to their equity base, we find nothing particularly noteworthy in a management performance combining,

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