264 IndexPrice
concept, 131
focus, problem, 141t
impact, 24–31
importance, 141
Price payment
concept, importance, 129
discipline, impact, 128–132
intrinsic value, contrast, 141
Price-to-book ratio (P/B), 23
groupings, Fama/French analysis, 24
Price to earnings/growth (PEG)
ratio, 203
examination, 229
list, 230t
Lynch popularization, 231
Price to earnings (P/E) ratio, 23
discussion, 188
expansion, 229
foundational metric, 228
increase, 227
stocks, bargain qualification (myth),
188–189
usage, 56
Principal, safety, 18
promise, 36
Private investment partnership,
setup, 245
Procter & Gamble (P&G)
discount rate, reduction, 9
Gillette acquisition, 237
Profitability
generation, continuation, 144
sustaining, 232
Profit statement, impact, 123
Property values, increase (exploitation),
131–132
Psychological tendencies, 241–242
Public companies, shares (purchase
approach), 10
Q
Qualitative attributes, value, 20
Qualitative factors, investor reliance, 125
Quantitative measures, reliance, 125R
Reading
importance, 87–88
suggestions, 88
Real estate investment trusts (REITs), 119, 157
Relative return approach, 64–65absolute
return approach, contrast, 65
Replacement cost, asset purchase price
(contrast), 184
Research, reliance, 177
Return
achievement, 39–40
adequacy, 36
earning, possibility, 153–154
satisfaction, 18
Return on equity (ROE)
bonds, coupon (comparison), 121
improvement, 123
increase, 123–124
understanding, 121–124
usefulness, 120–121
Return on invested capital (ROIC),
76–77, 117
manager focus, 118–121
Risk
carrying, increase, 181
investment involvement, 134
limitation, 153
minimization, 147–148
volatility, contrast, 59–60
Risk-free arbitrage, 153
Ruane, William, 21, 180
investment reflection, 54
Sequoia Fund statement, 51
S
Safety, conservative tests (importance),
171–172
Safety margin, 30–31, 92–95, 153
comfort, 141–142
concept, understanding, 94–95
determination, 128–129
existence, 190
increase, investor demand, 226
occurrence, 94–95bindex.indd 264bindex.indd 264 9/2/09 11:01:16 AM9/2/09 11:01:16 AM