Comments on: The Intelligent Investor http://www.goodevalue.com/2007/08/the-intelligent-investor/ It may be cheap, but is it a Goode value? Sun, 16 Oct 2011 22:06:46 -0400 http://wordpress.org/?v=2.8 hourly 1 By: Michael Goode http://www.goodevalue.com/2007/08/the-intelligent-investor/comment-page-1/#comment-1539 Michael Goode Sat, 10 Jul 2010 23:55:52 +0000 http://www.goodevalue.com/2007/08/31/the-intelligent-investor/#comment-1539 Actually, capital expenditures are quite high in the railroad industry, at least to add new track or add new locomotives and cars. As to BP, the big question is how much they will have to pay in lawsuits. It is generally not a good idea to invest when there are huge potential liabilities that are hard to know unless the price seems cheap even factoring in a worst-case scenario. Actually, capital expenditures are quite high in the railroad industry, at least to add new track or add new locomotives and cars. As to BP, the big question is how much they will have to pay in lawsuits. It is generally not a good idea to invest when there are huge potential liabilities that are hard to know unless the price seems cheap even factoring in a worst-case scenario.

]]> By: Markus Raves http://www.goodevalue.com/2007/08/the-intelligent-investor/comment-page-1/#comment-1538 Markus Raves Sat, 10 Jul 2010 23:51:10 +0000 http://www.goodevalue.com/2007/08/31/the-intelligent-investor/#comment-1538 Thanks Michael for this good recommendation on Benjamin Graham. I just started to read the book and become more interested in value investing. In parallel, I am also watching BNN and read some investing magazines. What strikes me is that most of the television shows or investiging magazines are more interested in predicting the future then looking at the business model and see if that business model will sustain crisis like the one in 2008. Good businesses are hard to find but when you look at Canadian National Railroad in seems obvious that this company has a duopoly with Canadian Pacific hauling goods throughout Canada. CNR also goes south to the border of Mexico. When the economy is picking up so does freight volume. A very sound business model, low in capital expenditure since railways have a 50 year or so depreciation and a high entry threshold for new competitors. As Buffet pointed out to look for so called toll bridges and the CNR model is such a toll bridge. No I must admit that it is tempting to just buy the share and disregard the price since you are convinced that the business model is sound and that the earn income will increase the capital base and eventually the share price but remember that the purchasing price of stock will define the return on your investment. I learnt to be patient but sometimes it is not easy to keep emotions out of the valuation process. Another stock that I am currently looking at is BP. Now completely different business situation than CNR but due to the oil spill the stock has become so inexpensive that it is a good deal. But I have to do my due diligence first and see, if their capital structure is strong enough to withstand a possible prolongation of the oil spill and thus higher cost associated with the capping of the well and the clean-up. Another unanswered question is the legeslative aspect which can put a veto or stop to offshore drilling in the US, so be careful not to jump on this opportunity too quickly. Anyway, Graham teaches you to look at business and not evaluating the stock charts etc. This, in my opinion, is the art of business evaluation and much more fun than analysing charts and trying to predict the future based on historical numbers. Thanks Michael for this good recommendation on Benjamin Graham. I just started to read the book and become more interested in value investing. In parallel, I am also watching BNN and read some investing magazines. What strikes me is that most of the television shows or investiging magazines are more interested in predicting the future then looking at the business model and see if that business model will sustain crisis like the one in 2008.

Good businesses are hard to find but when you look at Canadian National Railroad in seems obvious that this company has a duopoly with Canadian Pacific hauling goods throughout Canada. CNR also goes south to the border of Mexico. When the economy is picking up so does freight volume.
A very sound business model, low in capital expenditure since railways have a 50 year or so depreciation and a high entry threshold for new competitors. As Buffet pointed out to look for so called toll bridges and the CNR model is such a toll bridge.

No I must admit that it is tempting to just buy the share and disregard the price since you are convinced that the business model is sound and that the earn income will increase the capital base and eventually the share price but remember that the purchasing price of stock will define the return on your investment. I learnt to be patient but sometimes it is not easy to keep emotions out of the valuation process.

Another stock that I am currently looking at is BP. Now completely different business situation than CNR but due to the oil spill the stock has become so inexpensive that it is a good deal. But I have to do my due diligence first and see, if their capital structure is strong enough to withstand a possible prolongation of the oil spill and thus higher cost associated with the capping of the well and the clean-up. Another unanswered question is the legeslative aspect which can put a veto or stop to offshore drilling in the US, so be careful not to jump on this opportunity too quickly.

Anyway, Graham teaches you to look at business and not evaluating the stock charts etc. This, in my opinion, is the art of business evaluation and much more fun than analysing charts and trying to predict the future based on historical numbers.

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