Your Next Great Stock: How to Screen the Market for Tomorrow's Top Performers

Chapter 22. The Combination Platter Screen

People I work with sometimes marvel that my desk looks completely empty every day. It's not, of course. On top are a computer and a telephone. Inside is a big-button calculator. Next to it, for emergencies, are one pen and a pad of paper. But that's it.

There's no inspirational calendar. There's no calendar that satirizes inspirational calendars. There's no baseball or bobble-head doll. I keep only what I need, which, since I make words for a living, is just about nothing.

Corporate America is, in a way, becoming more like me. It's not that workers are adopting my Spartan approach at their desks. It's that fewer of us are welding axles and sewing shoe leather for a living, and more of us are just sitting around thinking stuff up. That's called an information economy, and it has made things trickier for stock pickers.

Thirty years ago the average company's book value, or what accountants say it would fetch by selling off its assets, was just 5 percent shy of its market value, or what the stock market said the whole company was worth. In other words, investors expected companies to have plants and hard assets, and were willing to pay only a smidgen more than the net value of those assets when buying shares. Today the average company's book value is well less than half its market value.

What are investors paying for? They're buying intellectual property such as copyrights and patents. They're buying brands, which allow companies to charge higher ...