Caveat Emptor Brutus !

Here’s one great quote by Warren Buffet which pretty much sums up what I’m trying to say. “I never attempt to make money on the stock market. I buy on the assumption that they could close the market the next day and not reopen it for five years.”

I guess somewhere between exorbitant salaries, big business names, fancy designations and pride (lots of it!), our beloved Wall Street guys forgot Finance 101. Finance 101 tells us that the amount of money I am paying for something should equal to the present value of benefits I will receive in the future. So far so good….and then things got complicated. We devised ingeniously complex ways of valuing things, we invented the concept of “Free Cash Flows”, “Weighted Average Cost of Capital” and all sorts of valuation techniques that can pretty much give you any value you want for any business, because we now have something known as “Analysts Discretion”.

Earlier people invested in businesses, now they just invest in accounting numbers. And IMHO (for those not used to using chat language, In My Honest Opinion)….well…accounting is just one big bitch. We’ve gotten so hooked-up to these fancy figures that we’ve failed to look at the core business behind these figures.  So much so that companies like Groupon, Angie’s List, Pandora and even Facebook have had to create fancy accounting to justify their business models. . A good photographer will capture good photographs, no matter what camera he has.

All I’m trying to say is don’t get carried away by accounting figures, analysts’ reports and estimates.  Look at the business behind this entire charade.

“You can be the best actor in the world, but you’re still acting and everybody knows that”