Is your investment advisor worth a hill of beans?

July 13th, 2011 by hackel Leave a reply »

How to tell if the investment advisor or security analyst you speak to is “worth a hill of beans.”

 

Ask the following 3 questions:

 

1-Explain, in detail, once you’ve estimated the entity’s free cash flows, how you arrive at the discount rate?

HINT: It’s not what you learned in grad school or the CFA exam.

 

2-Explain, again in detail, all of the adjustments you make to the published financial statements, to arrive at an estimate of free cash flow?

HINT: Lots of adjustments are required.

 

3-How do you define return on invested capital?

HINT: We’re looking for cash on cash.

 

 

For the real answers, see “Security Valuation and Risk Analysis” or call CT Capital LLC

Advertisement

Comments are closed.