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Show Me the Money

by admin
checking stock market on phone

Whenever I think back on the Dot-Com Era, I have to chuckle.

In the late 1990s, investors took leave of their senses in an increasingly speculative stock market. Talk about FOMO. The reality is simple: The value of a company is its ability to generate cash over time.

Investors value cash streams based on growth rates and risk. Given comparable risks, they’d prefer to own a company whose earnings grow 25% annually to one growing 10%. Managers are charged with maximizing shareholder value. To do that, they must continually evaluate profitability and remember four words: Show Me the Money.

Kip Caffey, Gibraltar Wealth Management

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