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ValuFocus Investing: A Cash-Loving Contrarian Way to Invest in Stocks by William F. Mahoney, Rawley Thomas

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Chapter 15

Getting to Know Our LCRT Model

A full working comprehension of our model is best accomplished by conquering the content of:

Chapter 14: Our Automated DCF Model—The Better Model
Chapter 15: Getting to Know Our LCRT Model
Chapter 16: Digging Deeper into the LCRT Model
Chapter 17: Putting Our Valuation Proposition into Perspective
Chapter 28: Incorporating Risk into Our Model

All five chapters are based on our automated discounted cash flow upgrade. They explain our calculations of risk and fade, dissect the LCRT methodology, and our training built into our ValuFocus model implementation process that together enable you to master what we believe you will agree is a new and better way to invest in stocks.

Three features distinguish our economically based discounted cash flow modeling process. They all center on the accuracy of the model itself.

1. First and foremost, our model focuses on the economics of a business, namely, its cash economic return, and not on what over time has become a highly sophisticated, highly manipulative, virtually self-serving accounting game.
2. We have developed greater accuracy in estimating a company's intrinsic value, built on cash: cash generated by the business, cash to pay the bills and reward investors, and cash to reinvest in continuing to grow. This good reading of intrinsic value has as its foundation a thorough analysis of the fundamentals of the business: qualities of management, products, services, operations, technologies, ...

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