AAAMP Value Blog

A Value Investing Blog

Slow and Steady Wins the Race

Net Financial Debt and Ratios: Analyzing Leverage & Risk

Net Financial Debt and its ratios are an effective and efficient metric when analyzing companies. These metrics are more important than ever because of the corporate trend to leave cash overseas and borrow domestically.

The balance sheet is the foundation from which a company operates its business. A company’s liquidity and the leverage used play a big role in the success or failure of a business. Net Financial Debt is a critical metric for investment analysis.

Low Cost No Commission ETF Portfolios

Low Cost No Commission ETF Portfolios are the best approach for investors to get started with small investment amounts. ETFs are the perfect investment vehicle for beginning investors, smaller portfolios, and larger portfolios that want significant diversification in a particular geographical area, sector, or industry.

Intrinsic Value and Its Relationship to Margin of Safety

The purpose of estimating intrinsic value is to take advantage of mis-priced assets. Don’t get discouraged because you feel it’s difficult to determine the intrinsic value of a stock. It is not a science! It is the variables that make up your estimated intrinsic value that are more important than an exact intrinsic value number.

Portfolio Diversification Definition and Purpose

Portfolio Diversification is a foundational concept in investing. It can be a rather basic and easy to understand concept. However, in its implementation, many investors make catastrophic mistakes with too much concentration and others settle for average performance because of over diversification.
Portfolio diversification is a balance between concentration and over diversification to optimize risk and potential return.

Analyzing Stocks On A Curve

Just as grading on a curve in school was inaccurate, analyzing stocks on a curve is inaccurate. Try to recognize when others (media, stockbrokers, etc.) are trying to tempt you to buy stocks based on this analysis. It’s a false choice you don’t have to make.

Altman Z-Score Formula – Screening For Bankruptcy Risk

As value investors, one of our most important rules is to avoid incurring large losses. There are two easy ways to subject yourself to possible large losses; buy stocks for more than they’re worth, and buy stocks of companies that go bankrupt. The Altman Z-Score is a formula of 5 basic financial ratios to help determine the financial health of a company. In particular, it is a probabilistic model to screen for bankruptcy risk of a company.

Price and Value: Know the Difference

Many investors don’t differentiate between price and value. Buying stocks at bargain prices lowers your risk considerably. If you are buying stocks just because everyone else is (they are going up) then you are playing with fire. You will eventually get burned. To be a successful investor you must differentiate, and understand the relationship, between price and value.



Ken Faulkenberry - Arbor Investment PlannerAs founder of the Arbor Investment Planner my passion is to educate and empower the individual investors to manage their own investment portfolio. The Arbor Investment Planner is a value investment portfolio management guide for those individual investors who choose to manage their own money. I focus on ideas and concepts important to the self directed investor; but put special emphasis on risk management, value investing strategies, and proper asset allocation and diversification.

- Ken Faulkenberry

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