Tren Griffin @trengriffin I work for Microsoft. Previously I was a partner at Eagle River, a private equity firm established by Craig McCaw. I am on the board of directors of Kymeta. Jan. 11, 2020 1 min read

1/ "General Electric shares are up 44% ....part of a shockingly high proportion of listed companies that have been losing money."  https://www.wsj.com/articles/money-losing-companies-mushroom-even-as-stocks-hit-new-highs-11578608209 

"Expected long-term cash flows, discounted by the cost of capital—not reported earnings—determine stock prices."

2/ Saying a business "loses money" avoids the need to do actual work that may create an analytical edge.

The real work is unavoidable unless you are a speculator (ie, not an investor). "GE once saw break-even cash flow as best-case scenario for 2019."  https://www.google.com/amp/s/www.bizjournals.com/boston/news/2019/12/18/ge-s-cash-crunch-faces-new-threat-in-boeings-737.amp.html 

3/ I am not expressing a opinion on the current GE valuation.

I am saying making a decision about valuation based only on whether the business is "losing money" is like trying to solve a murder mystery with only one clue (that may be false). If you want an investing edge: work!

4/ 25iQuiz: Assume you bought a 30-year US Treasury Bond paying a 3.00% coupon in September 2018. "That means the bond will pay $30.00 per year for every $1,000 in face value that you own."  https://www.bankrate.com/investing/how-often-do-treasury-bonds-pay-interest/ 

Did you "lose money" in the first quarter you owned that bond?


You can follow @trengriffin.



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