The subtitle of Harvey Mackay’s book Swim with the Sharks Without Being Eaten Alive (1996) offers this advice: “Do what you love, love what you do, and deliver more than you promise.” There’s no better way to develop a trusting partnership than to do more than the minimum your partner expects. Trust isn’t automatic; it [...]
Aggregate financial ratios give a reliable picture of the state of the highyield market and should not be neglected irrespective of technical factors. Technical factors driving the high-yield market can change fairly quickly but credit status will persist as hard evidence and change only slowly over time. The most important fundamental measures are: Free cash [...]
Most managers pick stocks by the numbers: P/E ratios, earning growth rate, EBITDA to enterprise value, and so on. Hundreds of studies have shown that you cannot outperform the market looking solely at numbers. Insight is required. But insight can cost a manager his job and a $500,000 annual salary. Picking stocks by the numbers [...]
The magic by which seemingly small income streams get magnified into huge market valuations is intimately tied up with the arcane mathematics of perpetuities. It sounds dull, but it is well worth understanding because it is the mathematical foundation of Wall Street wealth. Aperpetuity is defined as an investment offering a level stream of cash [...]
Competitor reaction to an innovative new development is always uncertain, but it is to be expected. Competitors have the power to obviate the assumptions in a business plan. Ignoring this power can lead to overvaluation of the option. We have seen this factor in the Amazon case. Prior to the innovation, some competitor reaction is [...]
If innovation has been the source of our extraordinary prosperity, it is important to inquire about its future. The good news is that the rate of discontinuous innovation in Western society appears to be accelerating. This rate is likely to hold if the two bedrock premises of innovation also hold over time: (1) the willingness [...]
Service relationships—with vendors, consultants, and law and accounting firms—have been mentioned as a hidden part of a company’s intellectual capital. Partnerships and alliances can be even more important. To the extent that a company can effectively muster the energies and the brainpower of a powerful strategic partner, it can speed its product development, reduce the [...]