Mirror Neurons

Every time I read the book The Little Book of Talent I get a feeling of rewiring my brain. It’s a fantastic book and it has to be read at least once a month. The book contains 52 tips for improving our skills and one of the tip is to stare at who you want to become. If you were…

Accounting For Long-Term Debt

I am a Software Engineer by profession. Some of the accounting concepts involving operating leases, pensions, stock options, deferred taxes, and long-term debt issuances sound arcane to me. When I encounter them in the annual reports I ignore them. This limitation didn’t bother me much until I read one of the principles of Penman – Ignore Information At Your Peril.…

Building Your Vocabulary

Few years back testyourvocab.com conducted an online experiment to determine the average vocabulary size of various age groups. The test results are given below. From this chart we can clearly see that between age 3 and 16, our vocabulary explodes at an average rate of 4 new words every day. Between ages of 16 and…

Ten Golden Nuggets

If I draw the frequency distribution of all the human achievements in the scale of 0 to 1 most likely I will get a bell curve as shown below. On the extreme right you will find people like Albert Einstein, Benjamin Franklin, and Mother Teresa having an achievement score of 1. On the extreme left you…

Accounting For Value – 4

I wrote three posts discussing about (1) p/e ratio (2) discounted cash flows (3) owners earnings (4) residual earnings (5) leverage effects on residual earnings. You can find all of them here. If you haven’t read them, I strongly recommend that you read them before reading this post. In this post I will be discussing about the limitations…

Collective Learning

Imagine an alien inside a spaceship which is orbiting planet earth. The entire life of the earth is unfolded to the alien as a movie and every second in the movie will cover one million year of earth’s age. The movie will run for 75 minutes as the total age of earth is 4.5 billion…

IBM Revisited

Early this year, as a part of value investing coursework, I wrote about my understanding of IBM’s business which can be found here. Few interesting things happened after that and I wanted to discuss about it in this post. From the chart given below, you can clearly see that the stock went below the price paid…