Not having academic background in economics (but in engineering), devouring the information presented in these videos coupled with reading investment literature available, I feel like being a guy in the desert finding an oasis. Such well made videos and easy to comprehend approaches on seemingly complex topics. I really do appreciate your effort and hopefully this effort will/have pay/paid off. Thousands thank yous. BR from Finland.
I am an engineer too , thanks to these videos I now have a better understanding of the fundamental analysis but we as engineers should understand that investing is more an art rather than a science .it is easy to go to a stock screener and put sales growth more than 20% , detbt/equity less than 0.5 , EPS growth more than 20% and end up in a situation where you don't find any stocks that fits all these criteria ! as opposed to our "engineering world ", the real world is not perfect so we have to learn to balance all these important parameters and make the best decision based on what reality offers us ;)
Your mama should be proud of you, cause you are explaining this stuff better than some college professors I have studied under. RESPECT! You are helping many, which makes you very credible and generous in my book. Thank you! If I can help in any way let me know, I'm a video and documentary guy.
8 лет назад+1
With the internet, many barriers to entry have been shattered; the primary example being access to information. Good post Bibo, and good video Preston.
These lectures are a typical example of undervalued commodities in the open public market of RUclips. Not many have bought ( watched ) them yet, despite the great wealth of knowledge in them. It is, may be, to the competitive favor of the few who have clicked and followed them through. In 2 days I have managed to view over 15 lessons. They make more than 80 percent of my newly acquired knowledge on the topic. All for free. Almost 2 good to be true... Just getting the feel for the grounds at this stage, and I hope that I will in time, be ready to practically follow some of your valuable advice.. Thanks a lot Preston Pysh
It is my pleasure to express gratitude to your efforts and time spent making these excellent videos. I have, certainly, acquired valuable and hands on insights into the subject in a very short time. And I am Looking forward to learn more through your podcast.
Found this in investors podcast network but liked that I could see it here on original channel. 10 years later this is as relevant as ever and so well explained! Comparable online college courses goes for as much as $3000+. Yet here it is free. Thank you!
Preston there is something i need to tell you, someone very smart once said noadays people know prices of everything but the dont know the value of anything, you are showing us how to recognise the value and this is what makes investors sucsesfull, knowing the real value, thank you so much
As an engineer, I love these videos. Honestly, the more I have learnt about the stock market, company valuation, and the approach shown in this video, the more parallels I see between the valuation of a company and my engineering problems. What I mean by that is, for example, in engineering related problems, engineers have formulas for EVERYTHING(Bernoulli's equation, all the various gas/fluid constants, simple buoyancy formulas, etc.), but those are just tools to use. Engineers still have to sit down and think about the problem(what's the overall system? What is the functionality? What is the fluid?). Before applying the tools/formulas, engineers have to figure out the "initial essence of the problem", and identify the assumptions we can make based on what engineers can learn about the problem. You know what I mean? Now applying that logic here in company valuation, I see it as: 1) The way company is run, interpreting its' financial sheets, etc.=finding the "initial essence of the problem"= aka Engineers thinking "is the fluid used a liquid? gas? what's the purpose of this system? what's the environment of the system?" 2) All these financial ratios(Debt/Equity, P/E, etc.) =Bernouli's equation, Newton's Laws formula, Gas constants, etc. = aka simple tools to be applied In Engineering, You can't apply a formula before understanding the essence of the problem...in Company Valuation, you can't apply a p/e ratio before understanding how the company is run. If you do, then you just get wonky inaccurate results that are good for nothing. Just wanted to share my thoughts. I hope this helps. If not, that's ok too! Cheers!
Probably watched this video a couple years ago, I've watched the other 3 rules and this basically changed my life. I'm not rich nor financial independent but I'm slowing getiting there. All thanks with this starting point where things got way more clearer. Keep up. Thank you very much
I love how you had both a "good" and "bad" example with the two companies, it really helped understand what it is one looks for and what it is one avoids when looking at the debt/equity and current ratios. Thank you so much!
Hey Preston, I find your videos absolutely great and so informative!! Couple of quick question for you though. 1) How does one find an accurate Debt/Equity ratio or Price/Book for a large international company such as google that keeps large cash deposits in international subsidiary companies for tax reasons? 2)Todays interest rates are very low, hovering around 0%. Would you expect a company that is well managed to take on more debt than normal in order to take advantage of these low interest rates?
Hi Preston big fan of your work. I was trying to determine the debt to equity ratio using the msn market site you are using although the website itself has changed since you video. I tried to calculate the debt/equity ratio but it doesn't quite add up to what is displayed on the website anymore, is it just me or is it because of the site changes?
Preston i am reading your book at the moment, it is fantastic. I have not come across any book that teaches investing in a simpler way than your book. Also the links to these RUclips lessons are fantastic as it has given me added dimension.
Preston, your educational stock videos are terrific. You present the information in such a organized and precise manner. Much respect and thank you. You are the man.
Everyday I am eager to get out of work to watch a few more episodes. Great series Preston. It is also very cool that you are an Aerospace Engineer. I did CS and Math but the older I get the more I get into finances.
It is great how you are explaining finance in a short and easy way to understand. Thank you. There is just one thing, You were comparing two companies from different industries. Disney and XM radio would not be a good example because Disney would need different debt than XM. It creates a big difference in the evaluation of companies. Although it is a good example for explaining a company having too much debt, it could be misunderstood by many.
Preston, please can you update these videos? As I believe we're living in different time to when these videos were created. For example, the P/E ratios are really high and the debt to equity are higher. So Buffett's analysis would be different nowadays. An example would be Apple.would love to see an updated playlist :)
Here at year 2020, watching your videos, very invaluable. Simplified explanation for a newbie in finance and investing. Thank you very much. You should be making more current vidoes.
Sir first of all thanks for sharing these info you are great. In this video you were telling about the current ration should we have to check this for every interim result when we have invested for a longtime.
Your videos are great! Very thorough and clear! Tried going on MSN.com - INVESTING - and there was no SUMMARY. It seems the site has changed so would please let me know where to look for all the summary information CURRENTLY? Thank you.
Preston! Thank you so much for these videos. As a telecom engineer who has been out of school a long time. This is a great course on the WB approach to investing! For all YOU folks wondering WHERE to find company INFO. Just login to your IRA brokers website and they ALL have everything you need to evaluate a potential investment. The TOOLS are all there> Just browse and you will FIND them!! May you be blessed with LONG life and GOOD health Preston and friends!
it's been 3days and currently I am watching video no. 28. you have provided excellent information. I started buying stocks on wallstreetsurvivor, investopedia and updown simulation before real buying. Engineering background helps a lot in analysis.
Different tickers(msn versus morningstar) gives me different debt results. This is throwing me off. Also some sites list a blank for debt signified by a dash where the numbers should be. Any explanation? Thank you so much Preston you are doing great.
This is the best stock info on the internet. Many charge a great deal of money to teach these types of courses. I"m interested as the comments were disabled on the Intrinsic value of Disney done back in 2012. Today the stock is well over $140 a share. At the time it appeared that the stock was over priced using the calculator, and many would have passed on Disney for that reason in 2012. I think the model calculation was simply stating that it was a bit over priced, and using Buffet's 4 base principles, being over priced is something he is not interested in investing in, however, it is does not take into account the future benefits of investing even if the stock appears over valued at the time.
If a company has a staggering business model and excellent returns then it makes no sense to wait for it to arrive at its intrinsic value... great companies come at a cost!!
Great video. Ironically I bought SIRI for 14 cents per share sometime after the crash. It's now in the $5 range. I've been taking profits along the way. Lucky maybe!
Who else has noticed Disney went from a market price of $45 in the video to $110 in 2019? All these videos lead to me believing this would be a good investment in 2012. That has been confirmed by looking at this.
Hi, Preston. All the liabilities of a company is a debt in terms of accounting. So what is the difference between debt used in your formula and liabilities used in balance sheet?
As far as I understand, debts are loans where you need to repay a principal plus interests. Debts are a subset of liabilities. An example of a liability which is not a debt is a simple invoice the company hasn't paied yet.
Preston Pysh no problem. I was noticing while looking for current ratio that it is so hard to find neither the direct value nor the total current assets and total current liabilities on the web. Even morningstar and msn money and many otgers dont have it . Can you suggest me where I can find this info?
Hello, Preston. Thanks for sharing all this amazing knowledge. I have a question. How do you analize the risk of a bank? Debt to equity ratio doesnt seem to work, because that is the business of the financial institution (this ratio is always very high). Is there any other way?
Analyzing banks is notoriously difficult. Even full time analysts cant do it. Warren Buffet once mentioned that banks are pretty much impossible to analyze. There is just too much going on.
Hey Preston, excellent video. Loved every part of it. Just a question - I was calculating the debt to equity ratio for AAPL for the year 2017, it comes out to 0.86 (which is more than 0.5) and the current ratio is 1.27 (less than 1.5) - both are not meeting Buffet's criteria. Yet, he bought AAPL in 2017 and 2018. Just curious if I am missing something.
What's the difference between D/E and Leverage ratio? I look at XOM at MSN. It has D/E 0.26 and Leverage ratio 2.02. As far as I know the leverage ratio should be Total Assets/Total Debt which doesn't make sense regarding the numbers prior.
Preston Mate. You are a star a legend I wish I had a teacher like you I would have cross buffet in coming 30 years time. Thanks once again keep it up. kindly suggest me few financial education best study books.
Video Summary: Buffet's 4 rules of Stock investing 1. Must be managed by vigilant leaders 2.Must have long term prospects 3.Stock must be stable and understandable 4.Must be undervalued. 4 lesson objectives 1.Vigilant leadership: Carefully Observant or attending, They look out for debt. 2. Low D/E ratio: WB likes to buy companies with D/E of 0.5 or less. Total assets-Total liabilities = Total Equities. A good debt to equity ratio is around 1 to 1.5. However, the ideal debt to equity ratio will vary depending on the industry because some industries use more debt financing than others. Capital-intensive industries like the financial and manufacturing industries often have higher ratios that can be greater than 2. 3. High Current ratio: How well company will handle the ratio in 12 months. Money flowing in (Assets)/Money flowing out (Liabilities). It compares current assets to current liabilities. WB likes a Current ratio 1.5 or higher. Current ratio measures the current assets of the company in comparison to its current liabilities.Hence if the current ratio is 1.2:1, then for every 1 dollar that the firm owes its creditors, it is owed 1.2 by its debtors. 4. What levels of debt are acceptable: Low levels
Thank you, very useful. As you are so familiar with stock could you advice any 2 companies (bench mark is preferred) one is best to invest and another worst one, as you did on your video, please? Thank you!
Hey, greet from Indonesia. My name is Freddy and I am a totally new to the world of stock investment. I have gone through your video educational tutorial form lesson 1 to 16. Some questions : 1. Can all the theory be implemented globally included in Indonesia? 2. How about debt and liabilities for financial instituion, especially banking which doesnt have their own money? Is ROE and DER still relevant? Appreciate for the answer and explanation. Thank you. Regards, Freddy
I don't understand why we should take Debt to equity ratio . Cos we already took assets - liabilities right ? Equity is already in positive and it is arrived at after we subtract the liabilities from assets right ?
Some sites say debt to equity = total liabilities/ equity while you teaches debt to equity = total debt/ equity.. with all my due respect can you explain this?? 🤔🤔
I see the total debt/equtiy listed anwhere between 99 to 1.5 does that mean it;s a percent? Like for every 1 dollar debt there is 99cents equity? I've started just simply going to the balance sheet and looking at the number, if there is more than twice as much equity as debt, thumbs up.
It's the year 2020... Thanks for the educational content. I was wondering why when visiting the MSN site, that ticker symbol "SIRI" doesn't list a Total Liabilities number, just a "-" symbol? What do we do in situations like this? Should we use Total Current Liabilities number instead? Btw: The MSN site list the D/E Ratio at -1000.00 as of 1/11/20 which doesn't make a lick of sense and so I'm attempting to calculate the numbers using the info on this video...
Kenanlambo, that is really great fortune for a guy who just started out newly. I am just learning the act of trading newly. I hope will have success also.
Hi sir For debt to equity ratio.... Equity=total assets - total liability... From in earlier classes we can derive equity only after deducting it from total assets so how we can use the quantity once again....
Is debt/equity & book value/share the same thing? If not whats the dif? 10Q so much for your courses you're one of the best teachers I've ever listened too I wish you'd have courses on more topics so I can be able to understand them so clearly thanks again
Debt to equity ratio signifies how much debt you will take up for every $1 invested in that company. But book value is the actual worth of that share ( the amount that the share deserves to be paid)!!
This was masterfully explained! I had to watch it a few times, but I wrote stuff down and followed along. I found that Yahoo Finance has (in year 2018) a much cleaner design, as opposed to MSN or Morningstar (but that's my opinion).
Hi, thanks for all the info you are sharing. i wanted to see the disney example on msn and morningstar, but there it is written the debt to equity ratio for stock and ind avg, can you explain which one is better and what is ind avg.? Thanks again.
I'm using Morningstar for data, and cannot seem to find the "Total Current Assets" and "Total Current Liabilities" numbers. Am I okay to just use the "Total Assets" and "Total Liabilities" from the most recent quarter (or maybe those even are current numbers)? Or should I look elsewhere for those "Current" figures? Really enjoying these tutorials!
not sure if you still need an answer. But go to key ratios -> full key rations data -> key rations -> financial health. Good luck. example: financials.morningstar.com/ratios/r.html?t=0P000004C0&culture=en&platform=sal
So it’s, feb 2020- Sirius Xmas radio has return 300 percent ( 8 dollars now, 2 dollars in 2012). And Disney around 205% ( 141 dollars now, vs 41 dollars in 2012) :-)
I am little confused on this. AGNC has a total debt/equity of 510.47 but their current ratio is .22 also their PE is 4.50 and Diluted EPS is 4.78 . Now If they have a low PE a good EPS how come their debt/equity is 510.47 thats 450% higher than .50 Could you help me find out how does this work? I am learning to read the balance sheet and all the other fundamentals. And I came across this company and I wanted to practice. Thank you !
Hi, I have a question. It was published that Warren Buffett bought last quarter APPL stocks in a value of 75M$. If I am examining the debts and equity of previous quarter: - Short-term debt - 18,478 - Long-term debt - 103,922 - Total stockholders' equity - 140,199 (all the values are in USD in Million, as described here: financials.morningstar.com/balance-sheet/bs.html?t=AAPL®ion=usa&culture=en-US&platform=sal) so, according to these values, The Debt to Equity Ratio = (18,478 + 103,922)/140,199 = 0.873 > 0.5. Also the Current Ratio is 1.24
You really can't strictly follow these rules when u r valuing a wonderful business! Warren Buffett is highly confident that Apple will be able to clear of its debt in the coming years because it has huge cash Reserves
HI THERE pRESTON THANKS FOR YOUR ADVICE, I ALSO WANTED TO SAY THAT IF YOU LOOK UNDER FUNDAMENTALS IN T MSN MONEY IT WILL GIVE YOU A LINK TO KEY RATIOS AND YOU ILL FIND THERE FINANCIAL CONDITION, THIS HAS CURRENT RATIOS THERE FOR YOU TO LOOK AT AND IT IS ALREADY WORKED OUT SO YOU DO'T HAVE TOO GO TO THE BALANCE SHEET. I HOPE THIS MAKE'S IT EASIER FOR YOU TO GET ACROSS YOUR GOOD IDEAS . 'WHICH YOU HAVE HELP ME WITH UNDERSTANDING RATIO'S QUITE A LOT THANK YOU AGAIN !
Hi Preston just want to clarify with rule 4 does it make sense to do use the calculator for tech companies such as apple and Microsoft? I did and the value is way off. Any thoughts?
Thanks for the video. Great explanation. I have a doubt. In Debt - Equity ratio, are current assets and fixed assets considered as equity?. I understand current liability will not be considered as it is not long term liability. is my understanding correct?
Hi, great job love your lessons. I have a question on this lesson debt/equity ratio below 0.5. Now I see in my search debt to equity 49.7 % or 56.2 % this means it's below 0.5 ? Thank you for your help.
Hail to the Engineers! Here's to hoping that one day we will have smart engineers and business minded people in the government to help mend the broken system that we have today, as Neil degrasse Tyson would have said.
@preston Psyh: i a doing your courses of warren buffet. But the MSN page is so different now. Which page should i turn to to get the good info for last 10 years?
Thank you so much Preston. You are so clear. I'm finding it really hard to find the information for the companies though. I can't find much on MSN (just a few little details like the price). I tried Yahoo Finance and find a fair bit more, but still can't find the dept to equity ratio nor any history of book value.
Hi Okoh. I wish you luck with trading too! Let me give you some advises. Be very patient when buying stocks, secondly follow the stock for a few weeks, just to be one with the ''wave'' of the stock, because once you have control over the wave, you will be able to make the best descisions while buying them.
I try to figure out why Warren Buffet likes current ratio above 1.5 and not below that. Debt to equity ratio is Total Debt/Total Equity, therefore the smaller the better, for saying it someway. On the other side, based on Warren Buffet criteria I understood current ratio works the opposite direction, the bigger the better. From this I assume that actual ratio is Next year income estimates/Next year debt to be paid. Am I right?
I was real interested in general electric and JNJ, but after looking at them again after watching these videos' they don't seem so good, today, ge had a debt to equity of like 3? that seems rediculous, and jnj p/e was over 20
Not having academic background in economics (but in engineering), devouring the information presented in these videos coupled with reading investment literature available, I feel like being a guy in the desert finding an oasis. Such well made videos and easy to comprehend approaches on seemingly complex topics. I really do appreciate your effort and hopefully this effort will/have pay/paid off.
Thousands thank yous. BR from Finland.
totally in the same situation as you. aerospace engineering here
Heikki Keskiväli How are you doing 4 years later. I honestly wish you the best and love to hear a success story.
Same lmao. A junior in Industrial engineering over here
I am an engineer too , thanks to these videos I now have a better understanding of the fundamental analysis but we as engineers should understand that investing is more an art rather than a science .it is easy to go to a stock screener and put sales growth more than 20% , detbt/equity less than 0.5 , EPS growth more than 20% and end up in a situation where you don't find any stocks that fits all these criteria !
as opposed to our "engineering world ", the real world is not perfect so we have to learn to balance all these important parameters and make the best decision based on what reality offers us ;)
Agreed! Nicely said.
Your mama should be proud of you, cause you are explaining this stuff better than some college professors I have studied under. RESPECT! You are helping many, which makes you very credible and generous in my book. Thank you! If I can help in any way let me know, I'm a video and documentary guy.
With the internet, many barriers to entry have been shattered; the primary example being access to information. Good post Bibo, and good video Preston.
just wondering, do you know Warren?
that stock went up! ??
These lectures are a typical example of undervalued commodities in the open public market of RUclips. Not many have bought ( watched ) them yet, despite the great wealth of knowledge in them. It is, may be, to the competitive favor of the few who have clicked and followed them through.
In 2 days I have managed to view over 15 lessons. They make more than 80 percent of my newly acquired knowledge on the topic. All for free. Almost 2 good to be true...
Just getting the feel for the grounds at this stage, and I hope that I will in time, be ready to practically follow some of your valuable advice..
Thanks a lot Preston Pysh
It is my pleasure to express gratitude to your efforts and time spent making these excellent videos. I have, certainly, acquired valuable and hands on insights into the subject in a very short time. And I am Looking forward to learn more through your podcast.
I second this. Thank you so much.
It's 2021 and your video is still awesome after 9 years of posting.
Found this in investors podcast network but liked that I could see it here on original channel. 10 years later this is as relevant as ever and so well explained! Comparable online college courses goes for as much as $3000+. Yet here it is free. Thank you!
Congrats on this wonderful work! Studying companies finances is great and yet you make it greater!!.Keep up the amazing work
Preston there is something i need to tell you, someone very smart once said noadays people know prices of everything but the dont know the value of anything, you are showing us how to recognise the value and this is what makes investors sucsesfull, knowing the real value, thank you so much
As an engineer, I love these videos.
Honestly, the more I have learnt about the stock market, company valuation, and the approach shown in this video, the more parallels I see between the valuation of a company and my engineering problems.
What I mean by that is, for example, in engineering related problems, engineers have formulas for EVERYTHING(Bernoulli's equation, all the various gas/fluid constants, simple buoyancy formulas, etc.), but those are just tools to use. Engineers still have to sit down and think about the problem(what's the overall system? What is the functionality? What is the fluid?). Before applying the tools/formulas, engineers have to figure out the "initial essence of the problem", and identify the assumptions we can make based on what engineers can learn about the problem. You know what I mean?
Now applying that logic here in company valuation, I see it as:
1) The way company is run, interpreting its' financial sheets, etc.=finding the "initial essence of the problem"= aka Engineers thinking "is the fluid used a liquid? gas? what's the purpose of this system? what's the environment of the system?"
2) All these financial ratios(Debt/Equity, P/E, etc.) =Bernouli's equation, Newton's Laws formula, Gas constants, etc. = aka simple tools to be applied
In Engineering, You can't apply a formula before understanding the essence of the problem...in Company Valuation, you can't apply a p/e ratio before understanding how the company is run. If you do, then you just get wonky inaccurate results that are good for nothing.
Just wanted to share my thoughts. I hope this helps. If not, that's ok too!
Cheers!
I am a Finance student from Hong Kong
I have to say that your videos are so great that enable me to learn many!
Thank
You
Very
Much!
Cheers! =)
Probably watched this video a couple years ago, I've watched the other 3 rules and this basically changed my life. I'm not rich nor financial independent but I'm slowing getiting there. All thanks with this starting point where things got way more clearer.
Keep up. Thank you very much
I love how you had both a "good" and "bad" example with the two companies, it really helped understand what it is one looks for and what it is one avoids when looking at the debt/equity and current ratios. Thank you so much!
Hey Preston, I find your videos absolutely great and so informative!! Couple of quick question for you though.
1) How does one find an accurate Debt/Equity ratio or Price/Book for a large international company such as google that keeps large cash deposits in international subsidiary companies for tax reasons?
2)Todays interest rates are very low, hovering around 0%. Would you expect a company that is well managed to take on more debt than normal in order to take advantage of these low interest rates?
Hi Preston big fan of your work. I was trying to determine the debt to equity ratio using the msn market site you are using although the website itself has changed since you video. I tried to calculate the debt/equity ratio but it doesn't quite add up to what is displayed on the website anymore, is it just me or is it because of the site changes?
thank you so much for your lectures i am learning a lot
Preston i am reading your book at the moment, it is fantastic. I have not come across any book that teaches investing in a simpler way than your book. Also the links to these RUclips lessons are fantastic as it has given me added dimension.
whoa, that was the fastest 19 mins. of my life! What a fun and easy to understand explanation. Thank you so much.
Preston, your educational stock videos are terrific. You present the information in such a organized and precise manner. Much respect and thank you. You are the man.
Thank you so much for explaining in such easy to understand manner. Your teaching skills are commendable.
But I have a query
Usually the actual equity is less than the book value so we have to move a bit conservative because in that case debt/equity >.5
Well done man. Good clear explanation. 18 minutes well spent.
Thank you for the comprehensive discussion. You are doing a good job! I am enlightened..
Everyday I am eager to get out of work to watch a few more episodes. Great series Preston. It is also very cool that you are an Aerospace Engineer. I did CS and Math but the older I get the more I get into finances.
It is great how you are explaining finance in a short and easy way to understand. Thank you. There is just one thing, You were comparing two companies from different industries. Disney and XM radio would not be a good example because Disney would need different debt than XM. It creates a big difference in the evaluation of companies. Although it is a good example for explaining a company having too much debt, it could be misunderstood by many.
Preston, please can you update these videos? As I believe we're living in different time to when these videos were created. For example, the P/E ratios are really high and the debt to equity are higher. So Buffett's analysis would be different nowadays. An example would be Apple.would love to see an updated playlist :)
Our man preston , preaching the good knowledge. I enjoy your guys podcast, thank you for helping to educate society on financial education!
Here at year 2020, watching your videos, very invaluable. Simplified explanation for a newbie in finance and investing. Thank you very much. You should be making more current vidoes.
Thanks Preston I really enjoy the info and your practical way of teaching
Super easy to understand ! Thank you !
Sir first of all thanks for sharing these info you are great.
In this video you were telling about the current ration should we have to check this for every interim result when we have invested for a longtime.
Your lecture clear as crystal and greatly appreciated. Thanks a lot Preston !
Thank so much for your videos...really helpfull for beginers.
Your videos are great! Very thorough and clear! Tried going on MSN.com - INVESTING - and there was no SUMMARY. It seems the site has changed so would please let me know where to look for all the summary information CURRENTLY? Thank you.
thank you so much for the transparent explaination, i can finally say i complete under the debt/equity ratio concept now....you sir are awesome!!!!
God will give you reward of doing this brother here in this world and hereafter in’sha’Allah
Preston! Thank you so much for these videos. As a telecom engineer who has been out of school a long time. This is a great course on the WB approach to investing! For all YOU folks wondering WHERE to find company INFO. Just login to your IRA brokers website and they ALL have everything you need to evaluate a potential investment. The TOOLS are all there> Just browse and you will FIND them!! May you be blessed with LONG life and GOOD health Preston and friends!
these are the best people to learn stock investing
Really helpful and informative series! Thanks :)
it's been 3days and currently I am watching video no. 28.
you have provided excellent information.
I started buying stocks on wallstreetsurvivor, investopedia and updown simulation before real buying.
Engineering background helps a lot in analysis.
Different tickers(msn versus morningstar) gives me different debt results. This is throwing me off. Also some sites list a blank for debt signified by a dash where the numbers should be. Any explanation? Thank you so much Preston you are doing great.
Cody Evans refer to the SEC filings for the most reliable results
This is the best stock info on the internet. Many charge a great deal of money to teach these types of courses. I"m interested as the comments were disabled on the Intrinsic value of Disney done back in 2012. Today the stock is well over $140 a share. At the time it appeared that the stock was over priced using the calculator, and many would have passed on Disney for that reason in 2012. I think the model calculation was simply stating that it was a bit over priced, and using Buffet's 4 base principles, being over priced is something he is not interested in investing in, however, it is does not take into account the future benefits of investing even if the stock appears over valued at the time.
If a company has a staggering business model and excellent returns then it makes no sense to wait for it to arrive at its intrinsic value... great companies come at a cost!!
Great video. Ironically I bought SIRI for 14 cents per share sometime after the crash. It's now in the $5 range. I've been taking profits along the way. Lucky maybe!
Who else has noticed Disney went from a market price of $45 in the video to $110 in 2019? All these videos lead to me believing this would be a good investment in 2012. That has been confirmed by looking at this.
Hi, Preston.
All the liabilities of a company is a debt in terms of accounting.
So what is the difference between debt used in your formula and liabilities used in balance sheet?
As far as I understand, debts are loans where you need to repay a principal plus interests. Debts are a subset of liabilities. An example of a liability which is not a debt is a simple invoice the company hasn't paied yet.
Very nice common sense type approach.Even a lay person can understand.
Relax Preston, no ones dying LOL... Loving the content
Very well explained for complete beginner like me . Thanks
You are an awesome teacher. Just loving your courses. Pure Gold
Preston Pysh no problem. I was noticing while looking for current ratio that it is so hard to find neither the direct value nor the total current assets and total current liabilities on the web. Even morningstar and msn money and many otgers dont have it . Can you suggest me where I can find this info?
Hello, Preston. Thanks for sharing all this amazing knowledge. I have a question. How do you analize the risk of a bank? Debt to equity ratio doesnt seem to work, because that is the business of the financial institution (this ratio is always very high). Is there any other way?
Analyzing banks is notoriously difficult. Even full time analysts cant do it. Warren Buffet once mentioned that banks are pretty much impossible to analyze. There is just too much going on.
Amazing content Preston, you have deep understanding of the subject and gift for teaching. Just wow!
Thank you.
Thanks a lot for this video. Really a big help!
Hey Preston, excellent video. Loved every part of it. Just a question - I was calculating the debt to equity ratio for AAPL for the year 2017, it comes out to 0.86 (which is more than 0.5) and the current ratio is 1.27 (less than 1.5) - both are not meeting Buffet's criteria. Yet, he bought AAPL in 2017 and 2018. Just curious if I am missing something.
@@fs6189 Thanks!
@@fs6189 nice seeing people answering questions!
What's the difference between D/E and Leverage ratio? I look at XOM at MSN. It has D/E 0.26 and Leverage ratio 2.02. As far as I know the leverage ratio should be Total Assets/Total Debt which doesn't make sense regarding the numbers prior.
Excellent explanation, Preston. Thank you.
THANK YOU so much for this easy to understand vid. Awesome!!!
Subscribed!
You teach extremely well, respect!
Thank you so much. Great explanation.
Preston Mate. You are a star a legend I wish I had a teacher like you I would have cross buffet in coming 30 years time. Thanks once again keep it up. kindly suggest me few financial education best study books.
Video Summary: Buffet's 4 rules of Stock investing
1. Must be managed by vigilant leaders
2.Must have long term prospects
3.Stock must be stable and understandable
4.Must be undervalued.
4 lesson objectives
1.Vigilant leadership: Carefully Observant or attending, They look out for debt.
2. Low D/E ratio: WB likes to buy companies with D/E of 0.5 or less. Total assets-Total liabilities = Total Equities.
A good debt to equity ratio is around 1 to 1.5. However, the ideal debt to equity ratio will vary depending on the industry because some industries use more debt financing than others. Capital-intensive industries like the financial and manufacturing industries often have higher ratios that can be greater than 2.
3. High Current ratio: How well company will handle the ratio in 12 months. Money flowing in (Assets)/Money flowing out (Liabilities). It compares current assets to current liabilities. WB likes a Current ratio 1.5 or higher. Current ratio measures the current assets of the company in comparison to its current liabilities.Hence if the current ratio is 1.2:1, then for every 1 dollar that the firm owes its creditors, it is owed 1.2 by its debtors.
4. What levels of debt are acceptable: Low levels
Thank you, very useful. As you are so familiar with stock could you advice any 2 companies (bench mark is preferred) one is best to invest and another worst one, as you did on your video, please? Thank you!
Hey, greet from Indonesia. My name is Freddy and I am a totally new to the world of stock investment. I have gone through your video educational tutorial form lesson 1 to 16. Some questions :
1. Can all the theory be implemented globally included in Indonesia?
2. How about debt and liabilities for financial instituion, especially banking which doesnt have their own money? Is ROE and DER still relevant?
Appreciate for the answer and explanation. Thank you.
Regards,
Freddy
It seems that MSN money now gives these ratios on their site
A wonderful video . Very comprehensive. I love it.
This guy is an Angel.
Preston you are brilliant!!!!!!
I don't understand why we should take Debt to equity ratio . Cos we already took assets - liabilities right ? Equity is already in positive and it is arrived at after we subtract the liabilities from assets right ?
your not going fast at all, very well explained. in fact, I'm playing your videos on 1.5x speed b/c 2x is a bit too fast! =)
Some sites say debt to equity = total liabilities/ equity while you teaches debt to equity = total debt/ equity.. with all my due respect can you explain this?? 🤔🤔
I think he got it wrong
I see the total debt/equtiy listed anwhere between 99 to 1.5 does that mean it;s a percent? Like for every 1 dollar debt there is 99cents equity? I've started just simply going to the balance sheet and looking at the number, if there is more than twice as much equity as debt, thumbs up.
It's the year 2020... Thanks for the educational content. I was wondering why when visiting the MSN site, that ticker symbol "SIRI" doesn't list a Total Liabilities number, just a "-" symbol? What do we do in situations like this? Should we use Total Current Liabilities number instead? Btw: The MSN site list the D/E Ratio at -1000.00 as of 1/11/20 which doesn't make a lick of sense and so I'm attempting to calculate the numbers using the info on this video...
Kenanlambo, that is really great fortune for a guy who just started out newly. I am just learning the act of trading newly. I hope will have success also.
Hi sir
For debt to equity ratio....
Equity=total assets - total liability...
From in earlier classes
we can derive equity only after deducting it from total assets so how we can use the quantity once again....
Is debt/equity & book value/share the same thing? If not whats the dif?
10Q so much for your courses you're one of the best teachers I've ever listened too I wish you'd have courses on more topics so I can be able to understand them so clearly thanks again
Debt to equity ratio signifies how much debt you will take up for every $1 invested in that company. But book value is the actual worth of that share ( the amount that the share deserves to be paid)!!
How should Debt/Equity ratio be weighted when looking at MICs?
This was masterfully explained! I had to watch it a few times, but I wrote stuff down and followed along. I found that Yahoo Finance has (in year 2018) a much cleaner design, as opposed to MSN or Morningstar (but that's my opinion).
Thank you!!! This couses are helping me tons.
Thank you!
Hi, thanks for all the info you are sharing. i wanted to see the disney example on msn and morningstar, but there it is written the debt to equity ratio for stock and ind avg, can you explain which one is better and what is ind avg.? Thanks again.
I'm using Morningstar for data, and cannot seem to find the "Total Current Assets" and "Total Current Liabilities" numbers. Am I okay to just use the "Total Assets" and "Total Liabilities" from the most recent quarter (or maybe those even are current numbers)? Or should I look elsewhere for those "Current" figures? Really enjoying these tutorials!
not sure if you still need an answer. But go to key ratios -> full key rations data -> key rations -> financial health. Good luck.
example: financials.morningstar.com/ratios/r.html?t=0P000004C0&culture=en&platform=sal
What does it mean when a company debt/equity ratio is high but the current ratio is above 1.50? What kind of company am I looking at?
Vice verse company debt/ratio is low but current ratio is low?
David Shervington First case the majority of the company's debt is long term bit the company can pay off short term debt and vice versa
Thank you Preston! This is amazing!!!! Keep it up!! True Hero!
So it’s, feb 2020- Sirius Xmas radio has return 300 percent ( 8 dollars now, 2 dollars in 2012). And Disney around 205% ( 141 dollars now, vs 41 dollars in 2012) :-)
I am thankful for these video.
I am little confused on this. AGNC has a total debt/equity of 510.47 but their current ratio is .22 also their PE is 4.50 and Diluted EPS is 4.78 . Now If they have a low PE a good EPS how come their debt/equity is 510.47 thats 450% higher than .50 Could you help me find out how does this work? I am learning to read the balance sheet and all the other fundamentals. And I came across this company and I wanted to practice. Thank you !
thank you so much sir... all of youre video help me so much in my investing.... god will pay you for youre amazing work..
what does (ttm) and (mrq) mean? in yahoo finance the financial highlights shows the dept/equity like this " Total Debt/Equity (mrq): "
Awesome lessons... So bad of me because it took me this long to find your channel...
Late is better than never!!
Thank you
Hi,
I have a question.
It was published that Warren Buffett bought last quarter APPL stocks in a value of 75M$.
If I am examining the debts and equity of previous quarter:
- Short-term debt - 18,478
- Long-term debt - 103,922
- Total stockholders' equity - 140,199
(all the values are in USD in Million, as described here: financials.morningstar.com/balance-sheet/bs.html?t=AAPL®ion=usa&culture=en-US&platform=sal)
so, according to these values, The Debt to Equity Ratio = (18,478 + 103,922)/140,199 = 0.873 > 0.5.
Also the Current Ratio is 1.24
You really can't strictly follow these rules when u r valuing a wonderful business! Warren Buffett is highly confident that Apple will be able to clear of its debt in the coming years because it has huge cash Reserves
HI THERE pRESTON THANKS FOR YOUR ADVICE, I ALSO WANTED TO SAY THAT IF YOU LOOK UNDER FUNDAMENTALS IN T MSN MONEY IT WILL GIVE YOU A LINK TO KEY RATIOS AND YOU ILL FIND THERE FINANCIAL CONDITION,
THIS HAS CURRENT RATIOS THERE FOR YOU TO LOOK AT AND IT IS ALREADY WORKED OUT SO YOU DO'T HAVE TOO GO TO THE BALANCE SHEET. I HOPE THIS MAKE'S IT EASIER FOR YOU TO GET ACROSS YOUR GOOD IDEAS . 'WHICH YOU HAVE HELP ME WITH UNDERSTANDING RATIO'S QUITE A LOT THANK YOU AGAIN !
Hi Preston just want to clarify with rule 4 does it make sense to do use the calculator for tech companies such as apple and Microsoft? I did and the value is way off. Any thoughts?
Thanks for the video. Great explanation.
I have a doubt. In Debt - Equity ratio, are current assets and fixed assets considered as equity?. I understand current liability will not be considered as it is not long term liability. is my understanding correct?
Hi, great job love your lessons. I have a question on this lesson debt/equity ratio below 0.5. Now I see in my search debt to equity 49.7 % or 56.2 % this means it's below 0.5 ? Thank you for your help.
Yes 49.7/100 =4.97
How do you know sir buffet like debt to equity ratio 1.5
Your videos are great help
Its in the book
Hail to the Engineers!
Here's to hoping that one day we will have smart engineers and business minded people in the government to help mend the broken system that we have today, as Neil degrasse Tyson would have said.
@preston Psyh:
i a doing your courses of warren buffet. But the MSN page is so different now. Which page should i turn to to get the good info for last 10 years?
Thank you so much Preston. You are so clear. I'm finding it really hard to find the information for the companies though. I can't find much on MSN (just a few little details like the price). I tried Yahoo Finance and find a fair bit more, but still can't find the dept to equity ratio nor any history of book value.
Clazza Maree use macrotrend
@@haochengliang9741 thank you will have a look!
Hi Okoh. I wish you luck with trading too! Let me give you some advises. Be very patient when buying stocks, secondly follow the stock for a few weeks, just to be one with the ''wave'' of the stock, because once you have control over the wave, you will be able to make the best descisions while buying them.
I try to figure out why Warren Buffet likes current ratio above 1.5 and not below that. Debt to equity ratio is Total Debt/Total Equity, therefore the smaller the better, for saying it someway. On the other side, based on Warren Buffet criteria I understood current ratio works the opposite direction, the bigger the better. From this I assume that actual ratio is Next year income estimates/Next year debt to be paid. Am I right?
Well I think you made a nice ratio yourself!! That ratio is right.
I was real interested in general electric and JNJ, but after looking at them again after watching these videos' they don't seem so good, today, ge had a debt to equity of like 3? that seems rediculous, and jnj p/e was over 20
very very good stuff