Learning that drives better investment decisions

Past Betas Tend to Regress Towards 1.0x

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Chart of the Day: Past betas tend to regress towards 1.00x. The beta you use for valuation is to infinity. To avoid mistake we use three betas: High risk: 1.25x, Average risk: 1.00x, low risk: 0.75x.

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Change in Net Working Capital Is Small, but Volatile

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Chart of the Day: Changes in net working capital are volatile because that change results from five separate forecasts. Net working capital is a small but volatile investment item.

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Medical House-Call Project Investment Had Everything but the Basics

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My Worst Investment Ever: Two years ago, I invested a large sum of money into a private equity deal to take over a family-run home doctor service. The deal was with a group of respected players, and the new money was designed to expand the business model across the country.

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The Hidden Costs of ‘Free’

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In our Top 5 this week, we uncover the price of anything ‘free’ in the financial services industry, consider the worst bear market, and check out ominous market signs. All this and more…

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Thai Analysts Have Been Most Accurate in Health Care

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Chart of the Day: Thai analysts have been 24% inaccurate on average. Most inaccurate in Industrials and Energy. Most accurate in Health Care, Real Estate, Telecoms, and Utilities.

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Thai Analysts Have Been 24% Wrong on Average

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Chart of the Day: Globally, analysts have on average been 22% wrong in their EPS forecasts. Thai analysts have been slightly more inaccurate on average at 24%. Remember, YAAW!

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Asset Turnover in Thailand Has Been Above the Global Average

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Chart of the Day: In Thailand, the asset turnover of the average company has been 90%. Thailand went from a low of 46% around the Asian Financial Crisis to a high of 117% around the Global Financial Crisis.

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Gross Profit Margin in Thailand Has Averaged 18%

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Chart of the Day: Thai firms have on average generated 18% gross profit margin. Thailand is more similar to China and Vietnam which are other markets more focused on manufacturing and less on branding.

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The Slippery Slope of Investment Advice

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In our Top 5 this week, we discuss the problem with following investment advice, reveal the market’s great financial gifts, and examine the recent stock fall. All this and more…

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Profitability Regresses Toward the Mean

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Chart of the Day: Over a decade we can’t see a complete mean reversion but the profitability regresses toward the mean. In other words, Stars tend to remain Stars and Dogs tend to stay Dogs.

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