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The Fresh Market - the leader in grocer operational efficiency

June 03, 2014 – Comments (4) | RELATED TICKERS: TFM , WFM

“Of course, there are plenty of ways we could define what makes a business either good or bad…Obviously, any of these criteria, either alone or in combination, would be helpful in evaluating whether we were purchasing a good or a bad business… For instance, what if we found out that it cost Jason $400,000 to build each of his gum stores (including inventory, store displays, etc.) and that each of those stores earned him $200,000 last year. That would mean, at least based on last year’s results, that a typical store in the Jason’s Gum Shops chain earns $200,000 each year from an initial investment of only $400,000. This works out to a 50 percent yearly return ($200,000 divided by $400,000) on the initial cost of opening a gum store. This result is often referred to as a 50 percent return on capital…which sounds better—a business that earns a 50 percent return on capital or one that earns a 2.5 percent return on capital? Of course, the answer is obvious… You would rather own a business that earns a high return on capital than one that earns a low return on capital!”  [more]

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Multiple In, Multiple Out

May 08, 2014 – Comments (2)

I’m currently reading Howard Marks’ book, The Most Important Thing Illuminated. The book seems pretty good (so far), and I’ve really enjoyed the periodic commentary from other successful investors, including Greenblatt and Klarman.    [more]

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“The p/e ratio of any company that’s fairly priced will equal its growth rate”

May 01, 2014 – Comments (18) | RELATED TICKERS: PNRA

This line comes out of Peter Lynch's famous book One Up Wall St.  It is the essential premise for using his PEG ratio, which divides the long-term EPS growth rate of a company by its P/E ratio.  If a company is trading at a PEG of 1.0, it's fairly valued.  If it's trading at a PEG of less than greater than or less than 1.0, it's respectively over- or under-valued.  [more]

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A couple mental models from Kahneman - The Halo Effect and Crowd-Sourced Guesses

April 23, 2014 – Comments (1)

In his book Thinking, Fast and Slow, Daniel Kahneman provides countless frameworks and models regarding our internal processes for thinking and making decisions.  I appreciate much of the content that he provides, but I find myself especially enjoying content that I can relate to from an investing perspective.  I’m always looking for that extra edge to help me think about the way I make investments.  [more]

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Is purchasing a home a good investment?

April 22, 2014 – Comments (19)

Catherine Rampell of the WaPo put out an article today citing the poor long-term real returns of homes.  The data stated in her article implies that the real annual returns of homes in the US over the last century have generated about 0.3%.  That's really horrible, and it doesn't even including annual homeowner maintenance.  [more]

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