There is a peculiar habit in finance where people confuse complexity with rigor. Build a bigger model, add more assumptions, stretch the forecast further into the future, and somehow the answer is supposed to be more trustworthy. The Discounted Cash Flow model sits at the center of this belief. It is taught in every business […]
There is a particular kind of investor who checks their brokerage account on dividend payment day the way a child checks under the pillow for the tooth fairy’s deposit. The money appears. It feels like a gift. It feels like the company reached into its vault, pulled out some cash, and handed it over as
The Mathematics of Why Dividends Are the Least Efficient Way to Get Paid Read More »
There is a number that investors love to throw around at dinner parties. Price to book. P/B ratio. It sounds clean. It sounds rational. You take what the market says a company is worth, divide it by what the accountants say it owns, and out comes a verdict. Cheap or expensive. Buy or pass. Except
Asset Light vs. Asset Heavy: A Tale of Two P/B Ratios Read More »
Every generation of investors falls in love with a new metric. In the 1990s it was earnings per share. In the 2000s it was EBITDA. In the 2010s it was revenue growth. Each one had its moment in the spotlight, and each one eventually revealed itself to be an unreliable narrator. Not because the numbers
There is a strange magic trick hiding in the tax code. It is not illegal. It is not even obscure. But most people walk right past it because it is dressed in the most boring costume imaginable: depreciation. The word itself is enough to make your eyes glaze over. It sounds like something an accountant
How Depreciation Can Turn a 30% Tax Bracket into 0% Read More »
There is a strange ritual that plays out every time a stock collapses after a short seller publishes a report. The company screams manipulation. Retail investors cry foul. Politicians call for investigations. Cable news anchors furrow their brows and ask whether short selling should be banned altogether. And then, quietly, months later, the SEC opens
There is a particular kind of frustration that value investors know well. You pull up the financials of Hermès or Ferrari, you see the price to earnings ratio, and you close the tab. Forty times earnings. Fifty. Sometimes more. The numbers look like a typo. Surely the market has lost its mind. Surely this will
The P/E of Luxury: Why Hermès and Ferrari Never Look “Cheap” Read More »
Most people see a price to earnings ratio of 100 and assume someone has lost their mind. A hundred years of earnings baked into a single share price. It sounds absurd. It sounds like the kind of math that only works if you close one eye and squint with the other. But here is the
Why the Simplest Line on a Chart Might Be the Most Truthful Thing in Finance There is a line on almost every stock chart that nobody wants to talk about when things are going well. It sits there quietly, moving with the patience of geological time while prices dart around it like nervous birds. It
The Brutal Honesty of the 200 Day Moving Average Read More »
The Strange Economy of Bad Moods There is a peculiar industry that most investors never think about. It does not manufacture anything. It does not ship products or file patents. But it moves trillions of dollars every year. That industry is collective emotion. When people talk about “the market,” they often speak as if it
Profiting from Pessimism: The Math of Buying When Everyone Is Complaining Read More »