ValuFocus Investing: A Cash-Loving Contrarian Way to Invest in Stocks

Chapter 22

Always Going Forward

Our process (and this book) provides first a set of investing principles. These principles then give you the flexibility to apply any model or a combination of models. Finally, we offer a range of application tools. We want to convince you to use our LCRT modeling. But you can use one of the dividend discount models (DDM) or an economic value-added (EVA) model or a cash flow return on investment (CFROI) model. You can choose the data source(s) you prefer.

We believe our structure serves as the foundation that also includes all the details. We want you to rely primarily on what we are giving you, because we have done all the really hard work. We hope that you agree. For you as an individual investor, and, indeed, for you even as a professional, it is both extremely expensive and time consuming to replicate what we have done already. Our premise is proven by the results. We know of investment banks that have spent millions of dollars trying to build the kind of models we have here. Yet, they ended up with little of value.

The LCRT modeling process is not about providing one calculation or another. It is an entire framework that combines all the insight and information that can be made into a cohesive way of studying the investment market, making smart buy/hold/sell decisions, and managing your portfolio.

Yes, cash flow modeling has lost out to earnings-built multifactor modeling until now, but we continue to advance our cash economic return model in ...