STREET DOGS: Make investing really easy
Metrics are a great way to value a company relative to the market’s other alternatives at the moment
From an article by Rick Aristotle Munarriz at Motley Fool: I’m going to make investing really easy for you. Smash your calculator. Rip up your valuation tables. Laugh off your know-it-all accounting buddy. Successful investing boils down to nailing the answers to the only two questions that matter. Numbers, schmumbers. I don’t mean to belittle the metrics. You’ll often find me leaning on ratios such as price-to-earnings, interest coverage and return on equity. Metrics are a great way to value a company relative to the market’s other alternatives at the moment, but you’re not going to unearth treasure by crunching numbers. Everyone has access to the same numbers. The collective market is already grinding them in its perpetual weighing machine to arrive at the perfect balance between buyers and sellers. That doesn’t mean that superior investing is random or hopeless. You need to soak yourself in the bubble bath of clarity long enough to realise that all you need to do is answer the tw...
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