A Simple Number Tells You If the Stock You Own is Worthless

A Simple Number Tells You If the Stock You Own is Worthless

Is there a secret to find the great stock?

The answer is no, there are no secrets… but there is a process and there are steps, you just need to learn about them.

And like any other learning experience, it is a mix of trial and errors, intuition, and bit of luck.

After learning for few years, I arrived to a process to find great stocks.

So, what’s this financial key?

Simply put, I want a business with positive and reliable free cash flow.

Free cash flow is all the excess cash profit left over after a business pays all its expenses and taxes and after it reinvests enough cash to maintain and grow the business.

Remember, when you buy a stock, you’re buying a piece of a business.

It’s not a debt, and it’s not a preferred stock.

It’s equity.

And equity is a “residual claim” on the earnings of a business.

“Residual” just means the equity holder doesn’t get paid until everybody else gets paid. This is really important.

What does that mean?

It means, there’s nothing left over for equity holders until all secured and unsecured creditors, salary and wage earners, taxes, and preferred stock holders all get paid.

Only after all these obligations are met, you, the equity holder, expect your shares to be worth anything.

In fact, excess cash flows are the one thing that give your stock nearly all of its value.

It makes sense, right?

 

This is what makes a business valuable:

 

The ability to generate lots of extra cash.

Without excess cash, your shares are worthless.

Free cash flow is easy to find.

All you do is go to the cash flow financial statement

“cash flow” section,

and subtract “capital expenditures” from “operating cash flow.”

Sometimes operating cash flow is called “cash from operations”

or “net cash from operations.”

And sometimes, capital expenditures are called

“additions to property and equipment” or something similar.

Take software giant Apple (AAPL), for example in 2021,

Here’s how I calculate Apple’s free cash flow:

Cashflow from operations is $104 billion.

Let’s subtract $11 billion for additions to property and equipment.

This equals $93 billion.

That’s a lot of free cash flow.

Very few businesses generate as much free cash flow as Apple.

What’s interesting is most people have no idea how important this financial key is, so they’re unable to understand what an amazingly good business Apple really is right now.

To sum up:

1- Free cash flow is all the excess cash left over after a business pays all its expenses and taxes and reinvests enough to maintain and grow itself.

2- Free cash flow is important because it’s the amount of excess cash available for creating shareholder value, which is how you make the most money.

3- Free cash flow = cash from operations minus property and equipment spending. Both those numbers are on the cash flow statements inside a company’s quarterly and annual reports.

If you’re interested in learning more about investing in the stock market and want to be successful investor, then you should check out my FREE EBOOK that features the top books every investor should read.

Click here to download the Top Books That Every Investor should read

You Can Be a Stock Market Genius

You Can Be a Stock Market Genius

Do you like to be a stock market genius?

You can be one if you’d like!

Confused?

I’m actually talking about the book “You Can Be a Stock Market Genius” By Joel Greenblatt.

Have you read it?

It is a must-read book for everyone who wants to be successful investor.

“You Can Be a Stock Market Genius” is a comprehensive and detailed guide on the stock market that written by a successful fund manager.

It helps the reader find “Special Situations” in the stock market.

Throughout the book, you’ll find useful insights into how you can invest in special market situations and achieve above-market returns.

Joel Greenblatt explains why having a basic set of rules that one needs while investing in special situations is necessary.

Reading this book will help you to be independent thinker when it comes to investing, believe in your own work, not to trust the noise out there, and have faith in your own analysis.

The book is filled with several case studies that’ll help you understand why special situations in the stock market can help you find your next 2x, 5x, or even 10x investment.

Knowledge is power and stock market is not an exception,

Reading books is the best way to gain knowledge and learn from highly experienced individuals who’ve seen it all in the market.

Also, if you’re interested in learning more about the stock market and want to get better at investing, then you should check out my FREE EBOOK that features the top books every investor should read.

Click here to download the Top Books That Every Investor should read

—————————

And if you are ready to take the first step, and invest in yourself, enroll in my course “Investing For Beginners: How To Invest With Confidence”  HERE.

What others said about the course?

Dr. Wafaa has shared her personal knowledge and expertise and provided the necessary information to start the investing journey based on a solid foundation. Her style in teaching made it very easy to grasp the concepts and understand the information being provided.
The course contains excellent information and working tips that you can use in building your confidence as an investor. The workbooks provided during the course are a very helpful tool and will continue to be a great handy reference for future use. I am really grateful to Dr. Wafaa for this excellent course and I highly recommend it to everyone. It is really worth the investment paid for it.
Mohammad Adnan Taibeh, Head of Economic Optimization

The Course was a very informative, suitable for people who just started out or willing to start investing in the US Stock Market. The course covers a lot of investment principles and how to manage your risk. I would recommend people who would want to learn about the stock markets and finance in general and also people already have knowledge on this field.
 Abdallah Al Alban, Financial Researcher

The course is very professional in the true sense. The course content was distinctive, smooth, and at the same time rich in important and updated information. Starting from explaining the simplest steps that help any beginner to go through the experience with confidence, passing through daily updates of the most important tools and sites that can be used. I highly command the course, it includes everything you need to start your investing journey. I would really regret it if I missed the course!  
Abdallah Al-Ansary, Language and development trainer

So, take that first step and start your investment journey HERE.

——————————–

If you want to increase your financial awareness and be financially educated to secure your financial future, grap a copy of my book “What They Don’t Teach You In Schools about Money HERE

What others said about the book?

The title of the book says it all; the content of the book truly does explain life changing concepts and things they do not teach you in schools. It made me come to a realization that this would be a great class to have in a university, not just for finance majors but for all majors.

Dalal Ali

The book has cleared the age old myths and psychology revolving around attaining money and success.
It is extremely educative about the various forms of investment and market risks.
The book truly “teaches everything they don’t teach in school about money”.
Thank you Dr. Wafaa once again, for being so kind as to sharing your valuable knowledge in a nutshell with all of us. I feel the book needs to reach a wider group of readers.
 
Tina Noronha

Dr. Wafaa I just wanted to say that book is such an amazing, well written book, it really made me take a look at my spending and changed my mindset and much more its officially my favorite book!

Ghada Beshara

Be Careful Who You Trust, Be Suspicious When It Comes to Your Money

Be Careful Who You Trust, Be Suspicious When It Comes to Your Money

Have you heard before that 225,000 people have died “Iatrogenic deaths?”

According to the journal of the American Medical Association it is the third largest cause of death in the United States, Iatrogenic.

What does this word mean? Is it rare disease? Is it genetic mutation?

No, it is actually referring to an inadvertent death caused by a doctor or a hospital or incorrect or unnecessary medical procedure.

Why they don’t say so?

Because it does not serve a medical institutions interest to put it in plain language so average person can understand.

Same thing is applied o financial world,

For example, financial industry, charge you different fees, mutual funds one of them, they charge different types of fees,

you don’t know and it will be impossible for you to understand they are taking much more than you would ever imagine.

Why the financial industry or the financial advisor does not serve your best interest, lot of money should be yours, but they take it.

You have to understand that there is conflict of interest, most financial advisors paid more or less depend on how much you invest, they paid commission or bonus based on your investment.

I  lost lot of money from investing my money with the wrong people in the wrong deals and I do not want you to be in the same place.
Particularly, I invested with an individual who repeatedly told me: “You Can Trust Me.”

If someone is always rushing to tell you they’re trustworthy, it’s a sign they’re probably anything but.

As Robert Kiyosaki said:
“Safeguard your money, the world out there to take your money. Those people are smart, very well trained on how to persuade and convinced you, they are more powerful than you, so they can easily take your money, they are cute ad cudly. You have to know that thieves are not only those stole precious things and criminal in prisons, in real worlds they take different types.”

I am not here to scare you, but I want you to increase your financial awareness to see what is going on behind the scenes.

It is good to listen to other people investment ideas, but never let them convince you to get involved before doing your own research.

Here are few tips:

1- Never invest without a contract in place and be careful who you trust.

2- Check out their claims by looking online, reading about the company and talking to trusted advisors.

3- Be careful of someone calling you with lot of promises or begging you to invest in a sweet deal. These types of people are trying to stir up your emotions by selling you an improbable dream. Don’t let that happens to you.

4- Be aware of Ponzi scheme, it is an investment fraud where people invest and their return on the investment is paid from the money of new investors. So, people who invested in first were paid their return using the investment money from people who invested in the second year. A lot of people lost their life savings in this scheme.

Get rich quick scheme are a dime a dozen.

Don’t buy the theory: this is how life is, life is unfair, find the way to make it fair!

If you want to increase your financial awareness and be financially educated to secure your financial future, grap a copy of my book “What They Don’t Teach You In Schools about Money HERE

What others said about the book?

The title of the book says it all; the content of the book truly does explain life changing concepts and things they do not teach you in schools. It made me come to a realization that this would be a great class to have in a university, not just for finance majors but for all majors.

Dalal Ali

The book has cleared the age old myths and psychology revolving around attaining money and success.
It is extremely educative about the various forms of investment and market risks.
The book truly “teaches everything they don’t teach in school about money”.
Thank you Dr. Wafaa once again, for being so kind as to sharing your valuable knowledge in a nutshell with all of us. I feel the book needs to reach a wider group of readers.

Tina Noronha

Dr. Wafaa I just wanted to say that book is such an amazing, well written book, it really made me take a look at my spending and changed my mindset and much more its officially my favorite book!

Ghada Beshara

————————-

And if you are ready to take the first step, and invest in yourself, enroll in my course “Investing For Beginners: How To Invest With Confidence”  HERE.

What others said about the course:

Dr. Wafaa has shared her personal knowledge and expertise and provided the necessary information to start the investing journey based on a solid foundation. Her style in teaching made it very easy to grasp the concepts and understand the information being provided.

The course contains excellent information and working tips that you can use in building your confidence as an investor. The workbooks provided during the course are a very helpful tool and will continue to be a great handy reference for future use. I am really grateful to Dr. Wafaa for this excellent course and I highly recommend it to everyone. It is really worth the investment paid for it.

Mohammad Adnan Taibeh, Head of Economic Optimization

The Course was a very informative, suitable for people who just started out or willing to start investing in the US Stock Market. The course covers a lot of investment principles and how to manage your risk. I would recommend people who would want to learn about the stock markets and finance in general and also people already have knowledge on this field.

 Abdallah Al Alban, Financial Researcher

The course is very professional in the true sense. The course content was distinctive, smooth, and at the same time rich in important and updated information. Starting from explaining the simplest steps that help any beginner to go through the experience with confidence, passing through daily updates of the most important tools and sites that can be used. I highly command the course, it includes everything you need to start your investing journey. I would really regret it if I missed the course!  

Abdallah Al-Ansary, Language and development trainer

 

So, take that first step and start your investment journey HERE.

Why Investing in ETFs is a Great Idea for Beginner Investor

Why Investing in ETFs is a Great Idea for Beginner Investor

Do you know that $100,000 invested in S&P Index fund 30 years ago,

Would be worth now $843,000?

And, $100,000 saved in highly yield bank savings account 1% annually 30 years ago,

Would be worth $134,969?

Saving money without investing, is the equivalent of the hamster who moves nowhere while running on the wheel, and tires themselves out in the process.

Saving without investing leaves you behind in the end.

The best and safest way to start investing is investing in Exchange Traded Funds (ETFs).

An ETF offers investors a way to invest in many stocks without buying them all individually.

It gives you the opportunity to invest in a lot of companies with less money.

Take S&P 500 ETF for example:

You can invest in companies in the technology, consumer staples, healthcare, financial, industrial, energy, and utility sectors by purchasing a single stock.

An S&P 500 ETF allows you to acquire pieces of Apple, Microsoft, Amazon, Facebook, Google, Visa, Tesla, Berkshire Hathaway, Johnson&Johnson, and many more all in a single stock.

In doing so, you are able to essentially become a part owner in all of the biggest companies with the best returns while minimizing the potential risk of losses.

An important issue you have to pay attention to when buying index fund:  THE FEES,

For example, an initial $10,000 investment in an index fund that earns 8% annually and charge 0.05% annual fees will grow to: $108,000 in 30 years.

The same investment in an actively managed fund that charges a 1% annual fee will grow to: $81,000

The fees you pay on your investments should be one of the first things you look for when choosing your investments.

Even paying just 1% in annual fees can drain your portfolio drastically over time.

When building your portfolio, prioritize using low cost index funds that charge less than 0.15% annually.

To learn more about ETFs and how you can get started invest in them, I prepare a FREE guide for you, Click Here to Download.

And if you are ready to take the first step, and invest in yourself, enroll in my course “Investing For Beginners: How To Invest With Confidence”  HERE.

 

What others said about the course:

Dr. Wafaa has shared her personal knowledge and expertise and provided the necessary information to start the investing journey based on a solid foundation. Her style in teaching made it very easy to grasp the concepts and understand the information being provided.

The course contains excellent information and working tips that you can use in building your confidence as an investor. The workbooks provided during the course are a very helpful tool and will continue to be a great handy reference for future use. I am really grateful to Dr. Wafaa for this excellent course and I highly recommend it to everyone. It is really worth the investment paid for it.

Mohammad Adnan Taibeh, Head of Economic Optimization

 The Course was a very informative, suitable for people who just started out or willing to start investing in the US Stock Market. The course covers a lot of investment principles and how to manage your risk. I would recommend people who would want to learn about the stock markets and finance in general and also people already have knowledge on this field.

 Abdallah Al Alban, Financial Researcher

 The course is very professional in the true sense. The course content was distinctive, smooth, and at the same time rich in important and updated information. Starting from explaining the simplest steps that help any beginner to go through the experience with confidence, passing through daily updates of the most important tools and sites that can be used. I highly command the course, it includes everything you need to start your investing journey. I would really regret it if I missed the course!  

Abdallah Al-Ansary, Language and development trainer

 So, take that first step and start your investment journey HERE.

5 Keys to Improve Your Financial Health

5 Keys to Improve Your Financial Health

If the current state of the world caused you to re-evaluate your financial health and urge you to take your money seriously, this blog is for you.

Getting your finances in order is more important now than ever.
It doesn’t matter where you’re now.

I will share with you today 5 fundamentals to improve your financial health no matter how much or how little money you have.

Let’s go over them,

1- Determine Where You Are Financially

 In a dialogue in “Alice in Wonderland”:

Alice: would you tell me please which way I ought to go from here

Cat: that depends a good deal on where you want to go to

Alice: I don’t much care where.

Cat: then it does not matter which way you go

What a piece of advice about clarity.

First thing first, you have to have clarity,

You need to be clear about where you are now, in order to know where you want to be.

Many people think that to achieve something in their life they have to set goal, this is correct, but in order to reach your goal you have to know where are you now, so in our case, you need to know where are you standing financially. Most people do not know.

Simply, understand your income, what you own, what you owe, what are your assets, and what are your liabilities,  the difference is your net worth.

 2- Make a Budget

Money doesn’t just drift into your savings account, and debt doesn’t get paid off on its own.

You have to be purposeful and have a plan.

You have to tell your money where to go.

You need to make a budget,

if you’re serious about wanting to take control of your money instead of having money take control of you, then you have to learn to live within a budget.

And despite what you may have been told,

a budget doesn’t limit your freedom, it gives you freedom!

If you want to seriously improve your financial health,

Make a list of your sources of income.

Income: List your monthly income, salary,

Expenses: Record your expenses using information from your spending tracker.

Do the calculation and compare your income to your expenses.

  1. If you have more income than expenses, now it is time to start saving or increase the amount you are saving.
  2. If you have more expense than income, carefully review your expenses.
  3. Make adjustment when you can, especially in the wants area of your expenses.
  4. At minimum, get your expenses in line with your income and if possible, start saving.

 

3- Spend Less than You Earn

There will always be temptations coming at you from every direction along the way.

Everybody wants a piece of your paycheck, am I right?

But you get to dig in your heels and say, “Nope. I choose to live wisely and within my means.”

This is the time when you really need to think through and identify your needs and wants.

A true need is something you must have for survival such as:

Food, electricity, Gaz, water, clothes, shelter.

A Want is something that is not essential to survival, but you would like to have such as:

Designer clothing, cosmetics, and brand shoes and bags

The confusion can arise when we are not sure if something is a need or want.

We live in world where pressure to spend money is constant.

We are surrounded by ads all the time.

They have one objective, to get your money.

So that’s why it worth paying attention to the difference. Nothing wrong to buy some wants but you have to save first.

4- Plan For Your Future

Nothing will make you feel more financially healthy than a stockpile of cash sitting in the bank, waiting for a rainy day.

It’s called your emergency fund, and it’s your safety net when emergencies happen.

Too many people reach for their credit card when their car breaks down, but all that does is turn a car problem into a money problem.

When you have money in the bank just for emergencies, you can simply get the car fixed. No stress. No drama.

And your financial health won’t take the hit, your emergency fund is there to protect it.

It can be difficult at times to build this up, but if you make it a priority, it will happen, and then you’ll have so much peace of mind!

And once you’ve got that, invest 15% of your income into retirement.

5- Adopt The Giving Mentality

This is a very important concept you have to understand from an early age.

There is a universal law, the more you give the more you receive.

There are always people less off than you, and you can help them.

It is an indication that you feel abundant about your money, and you are ready to receive more.

This is something you should not skip.

Even if you are still on a very low income, you can put aside 2.5% for giving.

Doing this reinforces the belief that you have plenty of money to go around.

The act of giving changes your relationship with money and with the people around you.

Living generously with an open hand keeps money in the proper perspective for you, and it blesses everyone involved.

Generosity is a sign of someone who is truly financially healthy.