Introduction for New Visitors

Welcome to the “Wealth Management Commentary” page. I shall leave this post “sticky”, so please scroll down for newer content. I intend to write on a variety of investment and wealth topics. That cover specific issues in some depth and hopefully in layman’s language. I shall start with core concepts to set the building blocks. Then …

Problems with Price-Book Ratios

There are a few problems with using book values to assess company and per share value. We shall review those, as well as look at how to improve the usefulness of Price/Book (P/B) ratios. Book Value is Not Liquidation Value The book value of a company’s net assets may not …

Price to Book Ratio

Another common analytical calculation is the price-to-book (P/B) ratio. Very popular among value investors. While price-to-earnings considers a company’s future earnings potential as a way to determine share price, P/B incorporates what the company owns. Not a ratio that I find very useful, but many others do, so you shall …

Problems With Price-Earnings Ratios

The price-earnings (P/E) ratio is probably the most widespread analytical calculation used by investors. Yes, it can provide insight into a company’s share price. Note that I say can, not does. But there are also a few potential problems with P/E ratios. Garbage In – Garbage Out Calculations are only …

Price-Earnings Ratio

In equity analysis, price-earnings is the most common ratio calculation. Used to analyze most investment styles, it is a cornerstone of value investing. Today we look at the concept and how to use it.  Note that the examples below use real data as at December 18, 2017 in US dollars. …

Value Investing

Investors often pursue investment strategies based on market capitalization. Additionally, equities may be viewed through the prism of being either value or growth stocks. Today we look at value investing. What exactly is value investing? What are its advantages and potential pitfalls. Should you value invest? Value Stocks Stocks in …

Quantitative & Qualitative Analysis

Before we look at the next investment style debate, I want to go through the two types of fundamental analysis. You will encounter both quantitative and qualitative analysis (aka “Quants & Quals”) when researching potential investments. Both are important to understand, as well as knowing their strengths and weaknesses. Quantitative …

Market Capitalization Segments

Within investment styles, it is common to aggregate assets by market capitalization. To find a company’s market capitalization (or “cap”), multiply current share price by number of shares outstanding. Market capitalization is useful in comparing companies of similar size. Understanding the differences between each size segment is useful. For example, …

Mutual Fund Introduction

Why are open end mutual funds worth reviewing? First, mutual funds are extremely popular and there are many funds in existence. Whether you intend to or not, you will come across funds in your investment travels. In 2015, 43% of US households owned mutual funds.  Second, I believe mutual funds, …

Investment Funds

To date, we have reviewed the major asset classes: cash and cash equivalent; fixed income; equity or common shares. There are a variety of lesser asset classes, as well as sub-classes within each class. We will cover some of these in time. You can invest in assets of each class …

How to Acquire Common Shares

Most readers have traded common shares of individual companies. The main method is to buy and sell shares on the open market through a brokerage account. However, you can invest in public companies using other means. Many investors acquire common shares through public offerings, direct stock purchase plans, dividend reinvestment …