Financial Frameworks: Better Decisions by Building on What You Know, Fundamentals & Value Investing

Dr. Michael G. Lehan

This podcast introduces financial frameworks as an essential tool for making sound financial decisions. The podcast outlines frameworks, provides concepts and tools while asking listeners questions. The emphasis is on learning by doing and includes two problems to be addressed by answering questions, doing some research and thinking about the values that go into financial decision making. This is an interdisciplinary approach to financial decision-making. read less
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Episodes

Financial Frameworks Podcast 37: Value Investing - A Practical Approach to Figuring Out Moats
04-05-2024
Financial Frameworks Podcast 37: Value Investing - A Practical Approach to Figuring Out Moats
Financial Frameworks addresses the question "What is a wide moat stock?" in the first of a two-podcast discussion by providing an overview of how professionals define moat stocks - with a particular nod to Warren Buffett.  And by taking a concrete and practical approach to the matter by looking at one stock in particular - Occidental Petroleum - using criteria outlined in the podcast and by present some professional investment opinions as to whether it qualifies or not.  Guess what? There is considerable disagreement.  The significant stake that Berkshire Hathaway has in Occidental (34% at this writing) is evidence that Berkshire is looking at Occidental in that light.  The discussion around Occidental makes it an excellent learning example because it is not a cut and dried proposition like a Coca Cola or Google.  As Financial Frameworks always does, there are questions for listeners to answer.  And all sources cited will be posted on Financial Frameworks website, https://finframeworks.com. The next podcast will look at selecting moat stocks from the other end of the telescope by investigating how we - you and I - employ our investing skills in searching for moat stocks and counteract our biases to best analyze the information presented in this podcast.  The next podcast will draw heavily from Daniel Kahneman and the late Charlie Munger. Who is currently being greatly missed at today's Berkshire Hathaway annual meeting.  The reason for combining an examination of  how you and I use our intuition to find and sort data with the objective information itself is my belief that both engines of our brains need to work together in order to succeed.  Just having the data without examining how we make the "moat stock sausage" is only half of the process.  Avoiding biases, counteracting impulses and selecting moat stocks in a disciplined process requires discipline as well as valuable information.  I think you will enjoy both podcasts together. Thank you for selecting Financial Frameworks as part of your financial education journey.  Mike Lehan
Financial Frameworks Podcast 30: Margin of Safety in Valuing a Company, Saving & Investing and Loss Aversion
27-05-2023
Financial Frameworks Podcast 30: Margin of Safety in Valuing a Company, Saving & Investing and Loss Aversion
Financial Frameworks continues looking for ways to apply margin of safety when selecting investments by looking at Professor Bruce Greenwald's approach to value investing. Prof. Greenwald divides a company into three parts for valuation.  He measures assets first, then current earnings and finally makes future growth estimeates separately. Today's podcast outlines Prof. Greenwald's thinking, the underlying logic and changes in markets that guide his thinking and suggests how you can apply his method.  Because his future growth estimates is so interesting, and more detailed than Discounted Cash Flow projections - which we discussed earlier - I will spend the next podcast on the hows, and what I think are the why's of  Prof. Greenwald process for estimating future growth a company's future growth.  The context for my analysis is to build a margin of safety into investing.  I may be being repetitive in reminding you of the context, but I don't think emphasizing margin of safety can be done often enough. Additionally, in response to listener comments, the podcast considers why most people look at savings accounts and investing as different activities - more like a fork in the road than as different stores on the Main Street of investing - and why we shouldn't. That topic brings me to a review of our loss aversion bias as the podcast's final topic. Financial Frameworks focuses on being clear about our decisions and understanding our values. This discussion is part of that process. As always, if you find this useful, please mention it to a colleague. Mike Lehan