I’ll have another article soon enough on multi-factor valuation techniques. Also, a review is coming on the timely book, “Super Stocks” by Ken Fisher. Timely because in an era of high profit margins, it is good to pay attention to P/S ratios.

On the topic of measuring earnings and apropos to your book review posts, have you read or reviewed Hewitt Heiserman’s book?

It is out of print, so maybe not of interest for you do a new review if you haven’t already, but he has some interesting concepts that seem of a similar mind to your style of analysis. Foremost is the idea of developing four separate earnings statements. I also like the approachable manner he gives for re-computing earnings and performing one’s own analysis.

That said, I’ve not tried it myself and wonder how generally applicable it is. My fear is his method works great for the companies and industries highlighted in the book, but not so much for others.

Which leads me into: those times I’ve tried any quantitative security analysis as described in any text I’ve read everything comes up negative. That is, any company I look at I wouldn’t want to own. And the few that seem like sound investments have gotten clobbered and are getting more clobbered.

Now one obvious explanation is the old value investor’s creed that in the short term stock prices are votes in a popularity contest more than measures of business value, but that has always given me cold comfort because as Keynes said in the long-term we’re all dead. But, hey, it’s been a few years since I last did any rigorous value analysis in earnest and perhaps owing to my increased maturity I’m getting more comfortable with time frames greater than a few months, so I’m looking to give it another try.