Thought of the Day

A short quiz: If you plan to eat hamburgers throughout your life and are not a cattle producer, should you wish for higher or lower prices for beef? Likewise, if you are going to buy a car from time to time but are not an auto manufacturer, should you prefer higher or lower car prices? These questions, of course, answer themselves.

But now for the final exam: If you expect to be a net saver during the next five years, should you hope for a higher or lower stock market during that period? Many investors get this one wrong. Even though they are going to be net buyers of stocks for many years to come, they are elated when stock prices rise and depressed when they fall. In effect, they rejoice because prices have risen for the "hamburgers" they will soon be buying. This reaction makes no sense. Only those who will be sellers of equities in the near future should be happy at seeing stocks rise. Prospective purchasers should much prefer sinking prices. 

Warren Buffet, 1997 Letter

Thought of the Day

There are two kinds of businesses: The first earns 12%, and you can take it out at the end of the year. The second earns 12%, but all the excess cash must be reinvested - there's never any cash. It reminds me of the guy who looks at all of his equipment and says, 'There's all of my profit.' We hate that kind of business. 

Charlie Munger

Thought of the Day - 02

Bovespa has a lot of excellent stocks. And also has a lot of cheap stocks. However, it's difficult to find excellent and cheap ones.

Lirio Parisotto

Thought of the Day - 01

Sit Still: with individual stocks, 10% of the time they’re cheap enough to buy, 10% of the time they’re expensive enough to sell, and the rest of the time you should just hold them if you own them and avoid them if you don’t.

Steve Leonard of Pacific Capital

SUZB5 - Market Value x Enterprise Value

Regarding the previous post (Market Value x Enterprise Value), I did some calculations on Suzano numbers (average last 3 years).

1. I first calculated cash from operations and then divided by its market value, which gives a nice yield above 20%.
2. Then I added to the previous calculated CFO interests expenses and then divided by enterprise value, yielding 12.5%.