I wrote an a short post Great Job Bob!, this is a responce to to reader’s comments on that post.
You wrote about Home Depot (HD):
“…need to separate between the analysis of a company and a stock?”
Who are you kidding with this philosophical dribble? The CEO is ‘directly’ accountable to share holders for value, hence the generous compensation. To claim the stock was “overpriced” since 2000 is laughable but not laudable.
Before you suggest (again) a bonus for “ole Bobbie” consider the shareholders’ ROI…or would that be “just plain silly?”
Scott
Scott,
A CEO’s responsibility is to create shareholder value. But a CEO’s job is to achieve 
that through earnings and increasing the moat around the increasing return on capital, growing business; not through stock manipulation. In the late 1990s, Home Depot’s stock was overpriced – that is not CEO’s fault. Even if Bob Nardelli was the CEO then (though he was not), the blame goes to overexcited investors. The CEO was not the person who drove Home Depot’s stock to ridiculous valuation – investors were.
December 14, 2006 | Posted in Stock Analysis | Read More »
In this CNBC interview I discussed what I wrote for FT Oil, Diapers and US economy. As I’ve mentioned before, I have a voice made for newspapers and face for radio – it will not be a pretty picture, watch it at your own risk. http://www.youtube.com/watch?v=VcIJrJbmgOU
December 13, 2006 | Posted in Stock Analysis | Read More »
Herb Greenberg wrote a wonderful column and said something I’ve wanted to say for a long time, that blaming Bob Nardelli for the lackluster performance of Home Depot’s (HD) stock is just plain silly. Since Nardeli took over Home Depot in 2000, Home Depot’s earnings have grown at an amazing clip of 20% a year, revenues over 15%, net margins have increased [...]
December 8, 2006 | Posted in Stock Analysis | Read More »
I wrote this article for FT in 2005, but after reading news on Pfizer it feels like I could have written it today. Here are some excerpts from the article: Blockbuster success is a double-edged sword. In this litigious society a discovery of side-effects brings an army of tort lawyers to the doorsteps of pharmaceutical companies. [...]
December 4, 2006 | Posted in Stock Analysis | Read More »
“Any time you make a bet with the best of it, where the odds are in your favour, you have earned something on that bet, whether you actually win or lose the bet. By the same token, when you make a bet with the worst of it, where the odds are not in your favour, you have lost something, whether you actually win or lose the bet.” – David Sklansky, ‘The Theory of Poker’
Over a lifetime, active investors will make hundreds, often thousands of investment decisions. Not all of those decisions will work out for the better. Some will lose and some will make us money. As humans we tend to focus on the outcome of the decision rather than on the process.
On a behavioural level, this makes sense. The outcome is binary to us – good or bad, we can observe with ease. But the process is more complex and is often hidden from us.
One of two things (sometimes a bit of both) can unite great investors: process and randomness (luck). Unfortunately, there is not much we can learn from randomness, as it has no predictive power. But the process we should study and learn from. To be a successful investor, all you need is a successful process and the ability (or mental strength) to stick to it.
December 2, 2006 | Posted in The Process | Read More »
