Stock and… Cheese?

BNN is traditionally a channel for day traders- the what is hot today conversations often litter the broadcast. If you have been a reader of my blog it is needless to say this channel therefore doesn’t normally interest me. While flipping around the TV the other night I accidentally landed on BNN which was showing an episode of the series Stock and Awe as it differs from their normal format of stock “experts” and speculation I paused to give it a watch.
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Three Key Ratios For Investors

if you could only have four ratios to evaluate a company what would they be? This is a fun question that is popular in investing circles. For a laugh I’ll take my shot at it, what would you pick?

1) Current Ratio

Current Assets / Current Liabilities

Why?

This ratio keeps track of the company’s ability to pay its short term debt. If a company doesn’t have safety money to deal with debt then they might not be in business tomorrow and I don’t need any of that.

2) Dividend Yield

Annual Dividend Per Share / Price Per Share
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Weekend Reading Links

For your weekend reading pleasure a few interesting articles from around the globe about dividends, stocks, the market and other just plain interesting finance or economic oriented articles.

• GlobalEconomicAnalysis: Short Canada
• Gothamist: Stock for Steak
• Barelkarsan: Figure Out who is with you
• The DividendGuyBlog: Dividend Stocks Have Their Limitations
• DailyFinance: Berkshire Joins the S&P 500
• TheBigMoney: The Secrets of the Mexican Wave

Patience

The largest struggle I have as an investor is not researching companies, or finding and analyzing data, or even pricing a stock; it is having the patience to do all of these things properly.

Patience serves as a protection against wrongs as clothes do against cold. For if you put on more clothes as the cold increases, it will have no power to hurt you. So in like manner you must grow in patience when you meet with great wrongs, and they will then be powerless to vex your mind.
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When Greed Interferes: Puget Power (PSD)

On Friday February 7th Puget Power announced the closing of the sale of its core business at $30 per share. Regular readers of my blog will recall that I recommended a purchase of PSD in November of last year at $18. If one includes the $.25 dividend payment from Jan 16th, and the pro rata dividend of $.04 this transaction returns $30.29, or a profit of an impressive 68%.

While I am very happy to have a 68% win on a 3 month investment (and hope several of you are also counting your fortunes this weekend) I think this is a good time to turn around and look at the trade again to see if it was a wise trade or a bit of wisdom and a bit of luck.
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Graham Security Analysis (Session 1)

Benjamin Graham had a great investment philosophy. Find great companies determine their intrinsic value and then only buy them when they are cheap. Or as Graham puts it:  apply a set of standards to each purchase, to make sure that he obtains (1) a minimum of quality in the past performance and current financial position of the company, and also (2) a minimum of quantity in terms of earnings and assets per dollar of price. The Intelligent Investor P347-348 Harper Collins Edition 2003 Read More...