Cash Flow is most important Financial Statement

Dalal Street loves Profit and Loss statement because that where one finds all the metrics such as quarterly revenue, EPS, EBIT, EBITDA and margins. Therefore, Profit and Loss statement should be the most important financial statement. Nope!

I believe the most important financial statement is the cash flow statement. Unfortunately, it does not get a same level of attention as given to income statement. The reason analysts look at revenue, EPS, EBIT, EBITDA and margins, is that they are trying to estimate a cash flow number for future. They attempt to deduce the future cash flow. While I do believe that all three statements have its own reason to exists, it is the cash flow statement that is the true reflection of the current state of companies business. Continue reading rest of this article…

TIP Blog is One Month Old

It has been just over one month since I started actively posting on The Income Portfolio (TIP) Blog. It is a very short time frame, but it feels like I have been doing this for a long time.

So far…

I started slowly with about one post in a week. In the third week, I got hooked and started posting more frequently. I did not have much content on my blog spot and hence, there was practically no traffic and subscriber list was empty. Continue reading rest of this article…

Commodity Asset Class in Dividend Portfolio

One of basic tenets of portfolio construction is following the principles of asset allocation. This is much more applicable and valid for do-it-yourself individual investors. In this context, at a minimum, I need to look at and at least consider evaluating all possible asset classes. While doing this, I also have to keep in mind that my portfolio is based on dividend growth philosophy. Among others, a commodity is also one asset class which I believe I should be investing. The next question is what should be my investing vehicle?

In recent years, commodity has been in news due to continuous increase in market price. This price increase was not restricted to any one particular commodity, but just manifested itself to all types of commodities. Commodities include agriculture products (grains, oil seeds, fertilizers, pesticides), bullion (gold, silver, platinum), Oil and related products (crude oil, natural gas), chemicals and petrochemicals (additives, fibers, yarns, paints, polymers), Metals (iron, steel, aluminum, zinc, etc). So you see it is indeed a very large domain. Now what does it really mean to trade or invest in commodities? It does not mean we buy or sell or invest in real physical commodity. Continue reading rest of this article…

Financial Turmoil Explained

For quite sometime now I have been trying to figure out how to explain the present global financial turmoil either through words and/or through simple schematics. I tried to put in words and paragraphs, here also, I ended confusing myself. Many times I have started to sketch it on a piece of paper but ended up in a chaotic diagram (not knowing where I started). In this process, I realized, it is probably damn confusing and chaotic. Therefore, nobody could figure out, or nobody could track it, or nobody could measure it, or nobody could quantify it, or nobody understands it from a systemic level. My personal opinion is folks in investment banking sector are among the smartest and brightest group. It is just not possible that they did not see it coming. Folks just choose not to see it.


I found two very good educational or informational piece of information. One is an image which shows the schematic (much better than I was doing). Second one the video which explains in a story format. Continue reading rest of this article…

Buffett’s Secret Portfolio Recipe

So you think you know Buffett’s secret investment strategy. What is it? Buffet is a value investor who buys companies at deep value. Ask this question to any investor in financial world and he/she would respond with this answer with a blink of an eye. That’s true and correct. But another significant characteristics of Buffett’s portfolio is dividend growth investing. Not much has been written about this aspect of Buffett’s portfolio. Let us take a little deeper look into Berkshire Hathaway’s (BRK) holdings and analyze them from dividend investing perspective.

As of 4Q 2008, BRK portfolio had a total of 60 companies. The total investments in top ten companies consist of approximately 85% of the portfolio while the remaining 15% is invested in 30 companies. Now, this could be viewed as a “highly concentrated portfolio” or “portfolio anchored to good stocks”. Has Buffett forgotten the meaning of diversification or he just does not believe in diversification per se?. The table below shows the top 10 holdings, their percentage in BRK portfolio, and dividends per share. Continue reading rest of this article…

TIP Guy’s User Perspective about “moneyvidya.com”

Here at TIP blog, I am continuously talking about a methodological and sensible long term investments (as opposed to speculative stock picking games). Therefore, readers will find it unusual and surprising that I am discussing about my limited experience with a stock picking website. While its still true that I am not a trader, I am always experimenting (1) to keep my self aware of what’s happening around me; (2) with my own strategy against others; and (3) learn what not to do.

Today, I am going to discuss one of my most recent experiences with online stock picking platform or online social networking community. Last few days I have been participating and experimenting with moneyvidya.com (MV) website. Instead of watching passively from outside, I spent last few days playing around with its interface/capability and tried to figure out some of the key nuances. In order to avoid any personal bias, I will restrain myself from commenting on the stock picking per se. I will focus my comments only on (1) user experience; and (2) MV platform with reference to user’s quest for financial resource base, which includes quality of financial commentary and discussion. Continue reading rest of this article…

My Investment Buckets – An Overview

Many times on this blog, I have mentioned that my investing style is very much objective driven. I tend to follow the systemic approach. Whenever I think about my investments, I tend to look at from the full portfolio investments perspective. In addition, I also believe in continuous evolution, and hence I make changes as I learn more about any aspects of investing. Readers of this blog will find that I do not talk about mutual funds. That’s because I am not a fan a mutual funds.

In this post, I am providing an overview of my investment buckets. These buckets address my long term investment risk profile for 10+ years and beyond. This description is not related to asset allocation or diversification. The graphic below provides an schematic for overall perspective. Continue reading rest of this article…



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