The Intelligent Investor – Flashcards
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What's needed is a sound intellectual framework for making decisions and emotions from corroding the framework -Ben Graham hoped to every day do "something foolish, something creative, and something generous" -Buffet makes case for market inefficiency, value stock investing and Graham's approach
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Buffet Preface
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-first book ever to describe, for individual investors, the emotional framework and analytical tools that are essential to financial success -won a scholarship to columbia, where his brilliance burst into full flower -became a master at researching stocks in microscopic detail Core Principles: -stock is an ownership interest in an actual business, an underlying value that does not depend on its share price -the market is a pendulum that forever swings between unsustainable (making stock too expensive) and pessimism (too cheap). -The future value of every investment is a function of its present price. The higher the price you pay, the lower your return. -No matter how careful you are, you need a margin of safety--never overpaying after considering all risks. -the secret of financial success is inside yourself. 1. be a critical thinker 2. invest with patient confidence
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Graham's life and investment approach
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-graham will focus on principles not techniques -can be read as a guide to getting rich slowly -Graham divides investors into two types: defensive and enterprising -believes speculators can never win consistently
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Introduction: What to expect
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Defensive a) chief aim is avoiding losses b) secondary is low effort & annoyance and infrequent decisions Note: index funds didn't exist in grahams day
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Defensive investors
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Enterprising (active or aggressive) a) determining trait is willingness to devote time and care to selection of securities b) seeking a slightly better return (because expecting significantly better returns is probably unrealistic)
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Enterprising investor
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patient, disciplined, eager to learn, ad willing to put in the time needed and effort -must learn how to manage your emotions. Don't focus on the day to day movements of stocks, don't panic and sell when market declines
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Intelligent Investor
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emphasizes importance of buying at an attractive price. No matter how favorable the future, a stock can be overpriced and similarly, almost any stock can be attractive if the price is low enough
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Importance of having a margin of safety
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-graham does not claim to be able to show how to beat the market but rather how to do well -but those who have followed Graham's approach have often done much better than the market return. See Buffet's appendix More specifically Graham advises the investor on -how to limit losses -how to achieve sustainable gains -how to control your emotions An intelligent investor does not necessarily have a high IQ, just a good command of common sense for investing. -Discusses several boom/bust experiences in which many investors got carried away with enthusiasm and then suffered grievous losses. Lesson here is to avoid having your emotions overwhelm your own good sense
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Graham Overview
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a. An investment is based on thorough analysis, safe principle and adequate return. All else is speculation b. Graham sees margin borrowing as speculative which he advises against c. defensive investor has a balanced stock/bond portfolio. Dollar cost averages. May use mutual funds. ETFs were not available in grahams day d. Enterprising (aggressive) investor seeks to outperform market by careful analysis and selection. Avoid market timing like trades and avoid seeking short-term gains -Data mining pitfalls: Motley fool and dogs of the dow
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Chapter 1. Investment vs. Speculation: Results to be expected by the Intelligent Investor
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an investor must follow polices that are 1)inherently sound and promising and 2) not popular on wall street
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To enjoy a reasonable chance for continued better than average results,
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25%
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Graham seeks safety by having a balanced stock bond portfolio, defensive investor hold both stocks and bonds with neither representing less than_______
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Net Nets; such opportunities are rare
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Approaches for enterprising investor
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promises safety of principle, and adequate return based on thorough analysis -various mechanical approaches shown to be folly
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An investment______________________
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selling at less than their share in net current assets (working capital) alone
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bargain issues
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-Graham lived through WWI, the Great Depression, WWII and the inflationary periods of the post WWII era.
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Chapter 2. The Investor and Inflation (less weighted than other chapters)
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a. inflation erodes investment values b. Bonds' upside is capped whereas stock prices can rise with the price level. Ergo stocks are preferred, particularly when problematic inflation is expected c. but stocks do not benefit from inflation, their ability to hedge against price rises is limited d. Alternative inflation hedges: gold poor return, real estate a long term hedge but volatile. e. REITs and TIPS better hedges
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Rapid inflation areas of major concern
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The investor must never forecast the future exclusively by extrapolating the past. 1. This includes the corollaries such as forecasters who argue that stocks have returned an annual average of 7% after inflation ever since 1802. Therefore, investors should expect the same in the future. [p 80] 2. The value of any investment is and always must be a function of the price you pay for it. [p 83] 3. Robert Shiller, a finance professor at Yale, was inspired by Graham's valuation approach. he studies historical records and found [p 85-86] a) when the PE ratio goes well above 20, the market usually delivers poor returns afterward b) when the PE ratio drops well below 10, stocks typically produce handsome gains down the road. c) see chart of total return for next 10 years when PEs went over 20 [p 86].
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Chapter 3. A Century of Stock Market History: The Level of Stock Prices in Early 1972
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no margin, 50% in stocks -saw bear market coming -never extrapolate the past as you forecast; the world does not move in a straight line -stay humble when forecasting -commentary drew lessons form Dot.com bust -future returns will be a function of real earnings growth, inflation, change in PE
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PE rates high in 1972- Graham's advice:
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-Graham advises one never to base one's forecast on a simple extrapolation of the past i.e. stocks always beating bonds proved unsustainable -Discusses Shiller's adjusted PE index as a useful measure of how expensive the market is: current price of S&P compared to the last 10 years earnings adjusted for inflation (CAPE)
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Ch. 3 commentary
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a. Graham asserts that an investor's return objective should be related to his/her willingness to focus on portfolio management b. one who is not willing to put in significant time should stick to low risk investments c. discussion of bonds is out of date in the current very low yield environment d. Does not include investor's age n bond/stock mix question e. does discuss personal situation and psychological risk tolerance
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Chapter 4. General Portfolio Policy: The Defensive Investor
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Discusses Graham's advice not to go 100% into stocks. Updates bond discussion to include bond funds
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Ch. 4 commentary
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a. merits of common stock: dividends and growth b. Four rules 1) At least 10 different stocks in your portfolio 2) Large well financed companies 3) Extensive record of dividend payments 4) Reasonable P/E ratio c. Dislikes growth stocks,sees them as too speculative d. Portfolio changes should be few for a well-structured portfolio e. Dollar Cost Averaging to take advantage of market dips f. The investor's personal situation plays a role in portfolio consumption i.e. if your job is in that particular industry, you should not have too much of your portfolio dependent upon that industry g. views risk as mainly relevant for long-term holdings h. short-term cyclical moves should be largely ignored i. likes large, prominent, conservatively financed corporations
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Chapter 5. The Defensive Investor and Common Stocks
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discusses Peter Lynch's approach -emphasizes importance of both finding investments in familiar areas and then doing careful research in order to decide how to proceed -also considers dollar cost averaging with index funds
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Ch. 5 commentary
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a. gives specific advice on bonds which is not very relevant in the current market b. basically he advises one to avoid the riskier part of the market c. skeptical about new issues
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Chapter 6. Portfolio Policy for the Enterprising Investor: Negative Approach
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-one can now access the HY bond market with a diversified fund -high fees and expenses of such funds -EM bond funds may have some appeal -the more you trade, the less you keep
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Ch. 6 Commentry
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the biggest run-ups often occur in stocks so small that even many big investors can't access shares, aren't enough to go around -no matter how many other people want to buy a stock, you should only buy if the stock is a cheap way to own a desirable business -in IPOs prices become much higher than than value of the business it represents
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Aim at IPOs
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a. Enterprise common stock investing: 1) Buy low, sell in high markets: Very Difficult to do as markets can move in one direction for a long time 2) cheap growth stocks: rare 3) bargain issues 4) special situations: merger/convertable arb b. graham advises against doing what most active investors do such as chasing trends and hot new issues and ideas Three approaches -unpopular large companies: contrary opinion -bargain issues: net nets: A value investing technique in which a company is valued solely on its net current assets. The net-net investing method focuses on current assets (working capital) -Special situations: turnarounds, merger arb
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Chapter 7. Portfolio Policy for the Enterprising Investor: The Positive Side
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market timing s difficult/impossible to do successfully and consistently; a great company is not a great investment if you paid too much for it -growth stocks with sustainable high growth are rare indeed
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Ch. 7 commentary
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a. speculator seeks to profit from market fluctuations, graham sees that to be a bad idea b. investor seeks to profit by investing in suitable assets at suitable prices c. don't try to time the market d. dollar cost averaging is better than trying to pick tops and bottoms e. anticipates the advent of floating rate bonds
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Chapter 8. The Investor and Market Fluctuations
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-historically high price level -high P/E ratio -low dividend yields relative to bond yields -much speculation on margin -many offerings of poor quality IPOs
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bull market characteristics
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not likely to believe that the day to day or even month to month fluctuations of the stock market make him richer or poorer -even the intelligent investor is likely to need serious will power to avoid following the crowd
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serious investor
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discusses Mr. market and the need to largely ignore its day to day fluctuations -focus on the long term
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Ch. 8 commentary
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hypothetical investor who is driven by panic, euphoria and apathy (on any given day), and approaches his investing as a reaction to his mood, rather than through fundamental (or technical) analysis.
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Mr. Market
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a. most investors have probably done better by holding MFs than managing their own portfolio b. but most funds underperformed their benchmark c. and funds have fees and expenses which impact their net returns d. performance or go go funds. popular for awhile but did not generate performance that they hoped for e. Graham likes closed end funds when the discount is large f. balanced funds showed poor performance
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Chapter 9: Investing in Investment Funds (less weighted)
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While MFs are convenient and attractive of those with little skill and interest in managing their own portfolio, they have significant drawbacks -all too often, managers select them on the basis of their recent past performance; bad idea- hot funds turn cold. -funds generally underperform their benchmarks. the greater their expenses and taking, the worse they tend to do. past volatility tends to persist -poor fund performance is due to a number of factors which are discussed. -a few funds do better Guides: managers own a lot of their fund; low expenses; don't follow herd; closed end fund trading at discount
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Ch. 9 commentary
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a. pretty general generic advice about advisors b. they may help some people but don't expect too much c. Graham helped establish the CFA
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Chapter 10. The Investment and his Advisors (less weighted)
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-make sure you are dealing with an honest advisor -ask about fee structure -what are you seeking from the advisor? -will the adviser keep you out of trouble?
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Ch. 10 commentary
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a. bonds minimum coverage; but LBOs, etc b. Stocks: function of future earnings, cap rate c. Cap rate: function of long term prospects, management, financial strength, dividend record and risk d. growth stocks cap rate: normal earnings x (8.5 + 2*Expected growth rate) e. Also needs to take interest rates into account f. recognizes downplays role of industry analysis g. Two part analysis 1. Value based on past performance' 2. any modifications h. past performance value: what firm would be worth if past performance continues
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Chapter 11. Security Analysis for the Lay Investor: General Approach
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The capitalization rate, often just called the cap rate, is the ratio of Net Operating Income (NOI) to property asset value
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capitalization rate
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-general long term prospects -management quality -financial strength -dividend record -current dividend yield Problem areas: serial acquirers, Other People's Money (OPM; high levels of debt) excess, having one or only a few large customers Good things: large barriers to entry, marathon results, R&D, large and consistent owner income
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Grahams 5 five factors as important determinants of appropriate multiple
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a) look at 5 years financial statements b) look to avoid (1) serial acquirer (2) OPM (look for cash from financing activities) c) look to find (1) a wide moat or competitive advantage, created by things like (a) strong brand identity (Harley Davidson) (b) monopoly or near monopoly (Gillette) (c) unique intangible asset (like Coke) (2) revenues and earnings that have grown smoothly and steadily over the past 10 years (a) the fastest growing companies tend to overheat and flame out (b) [p 305] (3) effective research and development (a) P&G spends about 4% on R&D (b) JNJ spends 10% on R&D (c) look for consistency in R&D expenditures
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1) general long term prospects
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-what forecasts and how do they accomplish them -excuses of the economy and other matters -consistency of message in good times and bad -->look to avoid 1) big CEO salaries 2) reissuing options 3) big option overhang 4) promoters as opposed to doers 5)use of accounting gimmicks, restatements, recurring charges and extraordinary items
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2) quality of management
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a) Does it generate more cash than it consumes? b) How steady is growth in cash from operations over the past 10 years c) Look at amount and growth of Owner Earnings (1) net income plus (2) amortization and depreciation (3) less normal capital expenditures (4) less costs of (a) stock options (b) unusual, nonrecurring or extraordinary charges (c) income from pension fund -Look for a owner earnings per share that have grown at a steady average annual growth of at least 6% or 7% over the past 10 years [p 308] e) Look at capital structure (1) Long term debt should be less than 50% of total capital (2) Look at ratio of earnings to fixed charges
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3) Financial strength and capital structure
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a) if company has outperformed the competition in good times and bad, then it is probably making great use of capital, and it is less important that dividends are paid out b) companies that buy back shares when they are cheap (not when they are expensive)
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4) dividend record
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high relative to other securities and bond yields
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5) Current dividend rate
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a. don't focus too much on annual EPS b. if you do, be aware of traps: primary vs. GAAP, nonrecurring, fully diluted c. use average earnings over time; Shiller anticipated d. calculation of past growth rate
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Chapter 12: Things to Consider about Per Share Earnings
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1) Don't take a single year's earnings too seriously 2) Look out for booby traps in the per share figures ( i.e. extraordinary items): -special charges -dilution -special income tax situations (loss carry forwards, credits, etc.) -depreciation (accelerated depreciation which distorts income?) -How R&D is handled (expensed or capitalized) -"pro forma" assumptions
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Two Pieces of advice:
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Analysts used to use average earnings over a fairly long period of time (e.g. 7 to 10 years). This was thought to give a better idea of a company's earnings power than the results of a single year. This normally solves issues of special charges and distortions.
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Average earnings
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It is critical that the growth factor be taken adequately into account. Suggest comparing average growth of the last 3 years be compared to the corresponding figures 10 years earlier.
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growth
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Recent history and a mountain of financial data have shown that the market is unkindest to rapidly growing companies that suddenly report a fall in earnings. More moderate or stable growers tend to suffer somewhat milder stock declines if they report disappointing earnings. Great expectations lead to great disappointment if they are not met; a failure to meet moderate expectations leads to a much milder reactions. Thus one of the biggest risks in owning growth stocks is not that their growth will stop, but merely that it will slow down. And in the long run, that is not merely a risk, but a virtual certainty
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great expectations lead to great disappointment
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1. The only thing that you should do with pro forma earnings is ignore them. 2. Aggressive revenue recognition is often a warning sign of big problems. 3. Look to see how often extra ordinary events happen. Inventory adjustments every 6 months begin to look like a regular event, and not an extraordinary one. 4. Look for pension fund manipulation. 5. Caveat investor -Read financial statement notes backwards -- the damaging stuff is usually at the back -NEVER BUY A STOCK WITHOUT READING THE NOTES TO THE FINANCIAL STATEMENTS
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Ch. 12 Commentary
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-similar companies with very different levels of P/E ratios -Graham prefers the stocks whose price does not depend so much on future growth -in other words Graham prefers value stocks to growth stocks
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Chapter 13. Comparison of Four Listed Companies
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Four more stocks compared with the value stocks winning the comparison
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Ch. 13 Commentary
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two approacher
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Chapter 14. Stock Selection for the Defensive Investor
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equivalent of index fund today, basically buy the market
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1) go with the DJIA type portfolio
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1. Adequate size of the company - not less than $100 million of annual sales. 2. Strong Financial Condition - current assets (and current asset ratio) should be 2 to 1. 3. Earnings stability - some earnings for the common stock for each year in the past 10. 4. Dividend record -- uninterrupted for 20 years. 5. Earnings growth -- minimum increase of 1/3 in per-share earnings in the past 10 years using 3 year averages at the beginning and end. 6. Moderate PE ratio -- current price should not be more than 15 times earnings of the past 3 years (Zweig thinks that today, Graham might go 17 times average of last 3 years). 7. Moderate ratio of price to assets -- not more than 1.5 times the book value last reported. -Some tradeoff between P/E and P/B: 15*1.5 = 22.5 These characteristics will eliminate most companies and leave only song value ones
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2)Apply standards for a minimum quality and minimum quantity in terms of earnings and assets per dollar of price.
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1. investment by prediction is a fool's errand. 2. investment by protection is best -- protection from overpaying for a stock and overconfidence in your own judgment on quality of stock.
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Two investment approaches
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Graham explores the pros and cons of various sectors. While quite dated, he nonetheless offers some useful insights
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Graham Sector Analysis
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Updates Graham's crate and finds many stocks that meet each individual criteria. But does not explore how many meet all simultaneously. Advises to put 90% in an index fund
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Ch. 14 Commentary
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-Adequate Size -- more than $2 billion in market capitalization [Note: Above Zweig says $10 billion is equivalent to Graham's "big companies"] -Strong financial condition (1) 2 to 1 current ratio (2) long term debt does not exceed working capital (isn't this a quick ratio of 1 to 1?) -Earnings stability -- requirement for some earnings in each of the last 10 years eliminates the chronic losers -Dividend record -- no fewer than 255 companies in the S&P 500 had paid a dividend for 20 years in a row, and 57 had raised the dividend for 25 consecutive years. e) Earnings growth -- Graham's test of increasing earnings by 1/3 over 10 years is a very modest 3% per year. Seems that cumulative growth over 10 years should be at least 50% over the 10 year period, or 4% average annual rise per year. f) Moderate PE -- Graham likes 15 times average earnings for the past 3 years. g) Moderate price to book -- Graham likes a price to book ratio of no more than 1.5. This is more problematic today as more companies have intangibles such as goodwill from acquisitions and most companies are priced higher than multiples of Graham's day. h) Graham had an alternate test of multiplying PE ratio by the price to book ratio and seeing if the resulting number is below 22.5. If so, it passes the test.
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Updated Review of Graham's Criteria:
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Notes that most MFs underperform their benchmark index. And most individual investors do even worse. So investing must be difficult even though it seems that equaling the average market performance should be relatively easy Goal: Goal: consider possibilities and means for the investor to make individual selections which are likely to prove profitable--above average.
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Chapter 15: Stock Selection for the Enterprising Investor
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-standard approaches will generally produce average results -need to not follow the heard Graham Newman Method of Special Situations -arbitrages: liquidations (receive cash payments in company liquidation of assets), merger arb -Related Hedges: purchase of convertible bonds or convertible preferred shares, and the simultaneous sale of the common stock into which they are exchangeable) -Net Nets or bargain issues: buying companies for less than their book value per share in terms of net current assets (working capital) -workouts: arbitrage
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How to potentially beat the market (The Graham-Newman Methods)
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rather buy a great company at a fair price than a fair company at a great price
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Buffet's Approach
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1. Financial: CA> 1.5x CL; Debt <1.1xCA 2. Stable Earnings, no losses 3. Current Dividends 4. Growing Earnings 5. Price < 1.2 net tangible assets
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Used S&P Stock Guide to screen. Now can use internet or maybe Bloomberg Criteria:
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From EPS to ROIC ROIC=owner earnings / Invested Capital ROIC of at least 10% is attractive. Even 6-7% is tempting if the company has good brand names, focused management or is under a temporary cloud.
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Ch. 15 commentary
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(1) operating profit (2) plus depreciation (3) plus amortization of goodwill and similar items (4) minus federal income tax (paid at company's average rate) (5) minus cost of stock options (6) minus "maintenance" (or essential) capital expenditures (7) minus income generated by unsustainable rates of return on pension funds (at 2003, anything in excess of 6.5%)
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Owner Earnings
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(1) total assets (2) minus cash (and short term investments and non- interest bearing current liabilities) (3) plus past accounting charges that reduced invested capital
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Invested Capital
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-Graham's greatest student -combined Graham's "margin of safety" and detachment from the market with his own innovative emphasis on future growth -looks for what he calls franchise companies with strong consumer brands, easily understandable businesses, robust financial health,and near monopolies in their markets (H&R Block, Gillette) -Buffet likes to snap up a stock when a big scandal, big loss, or other bad news hits to get them at a discount -wants to see managers who set realistic goals and meet them, build businesses from within rather than acquisition, allocate capital wisely, and do not give themselves big paydays. -insists on steady and sustainable earnings -so the company will be worth more in the future than it is today
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Warren's Way
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-convertible bonds appear to offer an attractive tradeoff with some of the upside of stock and downside protection of bonds -but this comes at a price because the convertible offers less upside than the stock and less coupon income than bonds -Graham sees companies offering convertibles at tending to be low quality -does not like preferred stock and warrants
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Chapter 16. Convertible Issues and Warrants
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discusses covered call writing, negatively
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Ch. 16 commentary
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a. Penn Central: combine two weak companies and you get one bigger weak company b. Ling Temco Vought: Manufactured growth through acquisition of low P/E companies; serial acquirer that appeared to be growing c. NVF: a minnow swallows a whale; small company takes on a large company d. AAA Enterprises: IPO of a nothing company; sold on a business plan, lots of hype that didn't work out
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Chapter 17. Four Extremely Instructive Case Histories
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-Graham concedes malice of forethought in selection to illustrate a variety of points -found many companies which were speculative and overvalued compared with others which were undervalued -critical of security analysis which tend to take a short run view - consider specifics of Graham's list and the one in the commentary
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Chapter 18. A Comparison of Eight Pairs of Companies
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stocks must always be viewed relative to their price as compared to their intrinsic value -the market often scoffs at Graham's principles in the short run but his approach wins out in the long run
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Commentary
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on average, takeover don't make money for the acquirer -today, cash doesn't generate much return -companies buying back stock
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Chapter 19: Shareholder and Managements: Dividend Policy
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-graham has long advised and advocated that shareholders hold managers to a higher standard in their performance on behalf of the company's owners, the shareholders -poor managers are unlikely to respond to comments from small shareholders -but the actions of large shareholders, especially activists do often force change -says shareholders should demand generous dividends or a satisfactory explanation of why not -in earlier editions, Graham exhorted shareholders to demand appropriate behavior and performance of managers. In his last edition, he had largely given up -But with the rise of the activist investor, times are changing
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Graham's points
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Read proxy statements and vote -dividend payouts have been dropping over time -using funds for takeovers is all too likely to destroy value -with interest rates low, cash holdings generate very little income -stock buybacks have a number of advantages in theory. But in practice the often are used to facilitate stock option awards to managers
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Commentary
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-preserving principal -when you make an investment, what you want is a position to be OK if things don't work out all that well
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Chapter 20. Margin of Safety as the Central Concept of Investing
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-basic to investing in bonds and preferred shares -For stocks: margin of safety is a price equal to what the company could sell in bonds against its assets in a depression economy -another way of estimating the margin of safety is to compare the earnings yield with the bond yield of the company -but graham recognized that in a non-depression economy, seeking the above margin of safety is unrealistic -still he sees the pricing of growth stocks as generally lacking a margin of safety -first rule of investing: principal preservation; don't lose money -Advocates diversification as an additional margin of safety
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Margin of Safety
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Confronted with the challenge to distill the secret of sound investment into three words, we venture the motto, MARGIN OF SAFETY." -Applying the Margin of Safety to Stocks would seem to work with Growth Stocks 1. The growth stock buyer relies on expected earning power that is greater than that for the average shown in the past, and substitutes expected earnings for the past record in calculating his margin of safety expected earnings in excess of those projected. This could work if the calculation of the future is conservatively done, and it shows a satisfactory margin in relation to the price paid. 2. The danger in the growth stock program is that such favored issues have a tendency to set prices that will not be adequately protected by a conservative projection of future earnings. -->The margin of safety is always dependent on the price paid.
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Margin of Safety continued
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1. Even with a margin of safety in the investor's favor, the investment may go badly. 2. A margin of safety is not a guaranty, it simply provides a better chance for profit than from loss. 3. But as the number of investments increases, it becomes more likely that in the aggregate there will be a profit--the basis of insurance underwriting.
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Diversification is related to margin of safety but different
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1. many see no benefit in distinguishing the investor from the speculator. 2. Graham disagrees -- he believes the margin of safety may be "the touchstone to distinguish an investment operation from a speculative one." 3. The speculator believes the odds are in their favor when they take their chance and they might claim a margin of safety as a result from a propitious time, skill in analysis, adviser or system, etc. But these claims are unconvincing. 4. The investor's concept of a margin of safety rests upon a simple and definite arithmetical reasoning from statistical data. a) There is no guarantee that the fundamental quantitative approach will be successful in the future, but no reason for pessimism. b) "To have a true investment there must be present a true margin of safety." 5. "It is our argument that a sufficiently low price can turn a security of mediocre quality into a sound investment opportunity--provided that the buyer is informed and experienced and that he practices adequate diversification. For if the price is low enough to create a substantial margin of safety, the security thereby meets our criterion of investment."
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A criterion of investment vs. speculation
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one major risk is to overrate your own options of value -Ask: how confident are you in your analysis? -How will you react if your analysis turns out to be incorrect?
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Commentary
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1. Investment is most intelligent when it is most businesslike. 2. Every corporate security may best be viewed as an ownership interest in, or a claim against a specific business enterprise ... and the investor seeking to make profits from his security purchases and sales, is embarking on a business venture which must be run in accordance with accepted business principles. 3. Principles of business -know your business -- for the securities investor, this means do not try to make "business profits" out of securities--that is returns in excess of normal interest and dividend income. -do not let anyone else run your business unless you can adequately supervise, and you have unusually strong reason to have confidence in the integrity and ability of the person. -do not enter upon an operation unless a reliable calculation shows that it has a fair chance to profit-- not based on optimism, but on arithmetic. -have the courage of your knowledge and experience.
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Summary
