STE's Stocks Investing Journey

image credit to dreamstime.com In my last blog post, I talked about “The Power of Free Cash Flow” , the importance of having consistent and sustainable free cash flow for companies which would allow them to pay a dividend or buying back their own shares. Imagine if there is a company that could generate $68 MIL a day , do you think such company exist in world stock market ? Yes!  It's  Berkshire Hathaway (BRK )  and it was sitting on a massive cash pile at the end of 2018 and the cash continues to increase quarter by quarter in billions of dollar.  BRK is sitting with a gigantic cash amount of USD 114 Billion as of 1 st Quarter 2019. For the past 3 years, Berkshire was able to generate Free Cash Flow of USD 25.5 Bil /year (on average) and this will translate to about USD 69.8 Million / Day.

Accounting Profit is Fake Yup, you heard me correctly. Accountant’s idea of profit is prepared according to tax adjustments and accounting standards. These were established to provide consistency and governance across how accounting is done. The problem is these ‘rules’ are very much open to interpretation — leaving room for ‘creative accounting’. The collapse of Enron is a prime example of how investors and business owners assess a company’s financial performance is guided by all the wrong numbers . But if you look at the Net Cash Flow position, you will see that the company was losing cash. Sounds familiar?