Malc.. That is a good suggestion. We will place this in the wish list.

I've found the explanations of DES etc from messages Sept 2010, (Professor, Maj etc) but they are so useful that they should be linked to a Glossary (say) on your Front Page

Can you make available a Glossary to clarify Abbreviations. eg FIE, DES, etc.?

Thanx

MC

You mean crossed back into the black for the year? Good job indeed!

Fractal.. Let's hope we can keep rolling.. Keep up the good work..

As it crossed back into the black!  Considering I was down 20k less than 8 weeks ago this is a major feat for me. I know 20k is small fries to some of you high rollers out there but nonetheless this is a big deal for me lol! I never could've done it without the help of your site. Thanks guys, you rock!

Thank you for the great suggestions.  This is exactly what I needed to know as I am working on improving my sell discipline.

Valo, Good to see you found our sell discipline page on Geo. It is well hidden!!! http://geoinvesting.com/about/investmentdisciplines.aspx

I have found that the best sell discipline approach is some form of the methodical rule. How much you sell at the 20% market will depend on your risk assessment of the market as well as how much you like the company.  For example, in 2009 i tried to ride stocks as much as i could before selling and very little early in the rise. I have employed that same rule since September of 2010.  Also, the more you like the stock, the less you sell at 20%. 20% to 50% sell at 20% is the sweet spot.  

Ideally, I like to have two portfolios:

One that uses just the 20% rule with high concentrations in few companies. i would keep this port small and reduce the size once it reaches certain level. for example, let's say you start with 5k.. At about $50k, I would reduce to $25K.. so your sweet spot will be 25K to 50K..

The other that uses the methodical approach.

I have been a little messy lately and will stick some limits in next week using the methodical rule..

Are you following the sell discipline of 20% ?  Some of the picks go up 20% in just a few days?

I was thinking we should modify the sell rule to this...

"sell 50% of your position at the 20% mark and then methodically sell your position so that you will be totally liquidated by the time the stock attains your short or long-term targets."

What do you think?  With the 20% rule, my portfolio seems to be changing hands pretty often and some of the stocks are going up 100% these days (MERC, etc)  The methodical approach works, but is very active.

I would love to hear your thoughts on this subject...

I hope this book will not depress me. I need some good news lol.  I am currently reading the Miracle by Michael Schuman. It gives a nice glimpse of the historic success various Asian nations have accomplished.

I recently read Good to Great, by Jim Collins.  Talks about what makes companies great. Can help us evaluate good management as well as aid one in developing personal business goals.

Maj

 you want a great list of investing books Check out latest interview with abook that has billionaires Richard lefrak and Wilbur Ross  http://billspetrino.com

I am reading a book from Bud Conrad: Profiting from the World's economic crisis, finding investment opportunities by tracking global trends.

Very interesting book with a lot of back-up material.

He predicts a rough road ahead for us - due to economic imbalances that have built up over the past decade - but reveals how you can prosper. Increasing U.S. government and trade deficits, oil prices, Social Security and Medicare obligations for baby boomers , the credit crisis and the weakening dollar. He also examines why some of the government's actions - such as bailing out banks and curbing interest rates - fail to address more serious, longterm issues such as too much debt.

The crisis we have entered is a major deleveraging which is the biggest shift since the Great Depression. There are enough investment opportunities from interest rates in Japan, currency to commodities.

Hey,

Sorry for such the late response.

 Yes, you are correct with your understanding.

Here is some more information for you on this topic with the help of one of analysts.

The underlying premise is that the value of any derivative security "derives" its value from the value of something else - in the case of stock options and warrants, the value of the stock itself.  Therefore, options and warrants are constantly changing value as the stock price goes up and down.  If you think about it, if you have a warrant to buy a share at a $1, the value of that warrant is much higher if the stock is selling at $2 than it is if it is selling at $0.50 (actually at $0.50, the warrant is worthless as why would you buy a share for a $1 that you could only sell for $0.50 - you can buy that same share in the open market for $0.50).
 
So whatever the reason for the warrants being issued, compensation or financing, the change in their value over a reporting period is reflected as a non-cash gain or loss.  No money changes hands, it is really just an adjustment for accounting purposes to reflect the current value of the warrants from the previous reporting period. 

Maj

I will contact you when the new site is up and running.

Maj

How it works with utilizing? I am now working on my blog but HTML language is quite difficult, so my margin borders are not correct as you can see. I can't get it out. You can always contact me if you want the blog be utilized.

Hello Dutch,

We have some similiar ideas we were working on. Maybe you can utilize your blog here.. I hae some ideas i will discuss with you when we launch our new site.

Maj

Last month I was looking on my bookshelves and I thought what are now the best investment books I have read. At home I have around 70 books right now. I made a TOP-40 and that ones are in my opinion the best books about investing you can have on your bookshelves. So I started a blog were I hope to make some money.

http://thebestinvestmentbooks.blogspot.com/

If someone has some ideas, please respond or reply. Ideas according books are welcome but also according how to improve the blog.

Many of you may be familiar with some of the criteria that we use to qualify stocks as GeoSpecials.

Following a new slant, we will be increasing our emphasis on the U.S. sector when looking for stocks to include in the GeoSpecial list that may offer upside based solely on P/E ratio valuation gaps.  At times, but not always, we may see a need to reference documentation to help support our decision.

If a company is growing its EPS between 20% and 30% we will generally apply a P/E of 20 on trailing EPS and a P/E of 10 on forward EPS estimates/guidance. 

If a company is growing its EPS at greater than 30% we generally apply a P/E of 25 to 30 on trailing EPS and P/E of 15 to 20 on forward EPS estimates/guidance. 

We will also consider book value per share in some cases.

This is intended for investors to begin their own due diligence as we generally will not interview these firms or perform full due diligence..

thanks for the answer.

if I have understood correctly

 Non GAAP  omits the non-cash and one time cash items, so it migth be used  for valuation estimations.

GAAP figures include  the non-cash and one time cash items, so it is the true net income. 

 

So, when, for example,  CAGC declares: "4th quarter  Non-GAAP fully diluted EPS is $0.22 but  GAAP net loss was  $0.39 loss per diluted share",

I can understand this as: " 4Q eps is negative 0.39, but if you don't take into consideration  non-cash and one time cash items, eps was positive 0.22"

is this correct?

when a company declares  "non-cash charges reflecting change in fair value of warrants issued", what has happened?

Hello,

Thanks for the question.  GAAP accounting stands for Generally Accepted Accounting Principles.  It standardizes the reporting rules that U.S. public companies must follow when presenting financial statements. For example, it deals with topics related to revenue and expense recognition.

The most common issues we come across that effect the income statements are those that deal with issues of unusual "non-cash" expenses.  Let's look at the example of compensation expense.  This is referring to "money" paid to executives via stock in lieu of "cash".  In the old days clever companies would pay executives in stock as a way to increase the net income figure, since this really isn't a cash expense.  In essence, stock compensation was not treated as an expense. It can also be argued that it put smaller companies that couldn't match stock compensation figures in a weak position since they would have to pay more cash to retain employees; a reportable expense on the income statement.

Eventually, GAAP accounting rules were amended to treat stock compensation as an expense so companies couldn't "artificially" inflate net income.  The irony is that many of these items are not tax deductible. So they expect the company to report less net income yet pay taxes on the income figure as if it were not treated as an expense. That is why sometimes you may notice a company with a loss paying taxes.   There are also types of non-cash gains that must be subtracted from the income statement.

Now, you must also keep in mind that under GAAP accounting, certain one time cash gains/losses that are not related to the core operating results are also reflected in the income statement; items such as the profit or loss from the sale of some land.

So...what Wall Street does in the end is omit the non-cash and one time cash items from the income statement to calculate the true earnings power of a company. These adjustments are referred to as non-GAAP and what most investors look at in order to value a company. EBITDA is also a non-GAAP figure that some investors look to.

Sometimes you can find hidden value in companies that only report GAAP numbers by reading the operating section of the cash flow statement, where non-GAAP items can be identified and added back to net income.

Formula we use to derive non-GAAP net income: {Pretax income +/- adjustments} * {1-tax rate}

We plan on soon providing more information on non-GAAP items and how to calculate non-GAAP EPS.