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A letter was waiting for me on the kitchen table. My daughter had a letter from school. “What’s this?” I ask. My daughter was all smiles as she says, “I made Student of the Month.” Mrs. Accountant was not as excited as she should have been and I know why. Her bullshit meter goes off as easy as mine. I read the letter and discovered there is more than one Student of the Month. In fact, there are a lot of Students of the Month. And here is the coup de grace that set off the BS meter in Mrs. Accountant: Our daughter gets a free meal at a certain restaurant with all the other “Students” of the Month. Of course, mom and dad have to fork out an armload for their meal and mom and dad are required to attend the function if our daughter is to get her meal gratis.
Free: The one word in the English language sure to get people to look. It is used by marketers and scam artists alike with great skill. It is the most dangerous
Living Without Money, the Spending Fast and Buy Nothing Day
The Western word is being destroyed by a select group of people determined to live within their means. From artist Ted Dave and his Buy Nothing Day movement to Daniel Suelo who decided to live without money to Jeff Yeager and his spending fast to Mr. Money Mustache and his grand scheme to keep spending low, even when income rises, we face the greatest economic crisis of our generation. Or are we?
All too often we act as if the economy were an actual living being. It is not. The economy is only a construct of the human imagination. Can you image any animal living in crisis because their local economy collapsed? Even humans, thousands of years ago, did not worry about this crazy thing we call the economy. Somewhere between there and here we convinced the vast majority of people they are duty bound to feed this imaginary beast.
Valuation: Warren Buffett Style Investing
In the course of my work I am frequently asked to place a value on a business a client wants to sell or acquire. There are several ways to determine value in such situations. Today we are going to focus on the value of listed companies (stocks). Warren Buffett has stated most people should drop their money into an index fund and let it ride. If you are like me you follow Warren’s advice, but invest a portion of your money in individual stocks anyway.
There are numerous books on Warren Buffett and his style of investing. These books glance over the process Warren uses, focusing on tidbits of advice Warren has given over the years. Reading Graham and Dodd’s Security Analysis exposes how difficult it can be to value a company. Since Graham and Dodd, our understanding of value creation has grown and Warren Buffett uses the new analysis tools in his investing style.