In this episode, we discuss further why net income is useless. This is part of our Value Investing in Your Car series.
I’m curious about everything so this leads to a range of reading and learning outside of value investing, finance, and investing.
In these Value Investing In Your Car episodes, we talk about some of these things and much more to help you become a better value investor faster.
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- What mental models I use
- When does value investing work best
- Where it works
- What book reviews I have from everything I learn from
- What is the most important thing I learned in 2017
- How to learn faster
- What are the 4 most useless investing metrics
- If I could only use 3 investing metrics, what would they be
- And much more…
If you want to learn from the other episodes in this series, you can watch the entire playlist on YouTube here.
And remember, you can now also listen to these episodes as a podcast by going to the following places:
The podcast is now available on all major podcasting platforms on both Apple and Android.
If you want to watch our other Value Investing In Your Car Episodes you can do that by clicking here.
Today, I’m showing you another example of why net income is useless by using Berkshire Hathaway’s 1st quarter 2020 $50 billion net income loss as an example.
The worst net income loss Berkshire has ever shown… The horror, correct? Not so fast.
Operating income was up and cash flow was too.
I’ll tell you why all these things happened and why net income is useless in the video below.
Let’s get to it.
In this 11 – minute training I talked about the following things…
- Why I dislike net income so much
- How it’s just based on accounting rules and not real-world economics
- Why I focus more on operating income and cash flow
- Why the recent accounting change that led to Berkshire Hathaway’s recent $50 billion net income loss doesn’t make much sense
- And more…
What did you think about the video above? Did I miss anything? Let me know in the comments below.
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Here are the resources mentioned in the video above.
- Berkshire Hathaway Lost $49.7 Billion In The First Quarter – Via The New York Times.
- Why The P/E Is Useless And How To Calculate EV
- Value Investing In Your Car Episode 14 – Why The P/E Is Useless
- Why I Never Use Net Income
- Updated – Do You Have Proof That Cash Flow Is Better Than Earnings?
To view our recent post where I talk in-depth about what’s been going on over the last month or so and tell you 7 things you should be doing instead of panicking click the link below.
P.S. And if you want to watch our other Value Investing In Your Car Episodes you can do that by clicking here.
P.P.S. If you want to get the preliminary analysis checklist that allowed me to research 3,943 stocks in 73 countries in only 40 days click here.