TIP775: Why Your Valuation Metrics Might Be Lying to You w/ Kyle Grieve
We Study Billionaires - The Investor’s Podcast Network
GAAP vs Non-GAAP and Intangible Investment
Kyle details how capitalizing R&D and intangibles flips many GAAP losers to profitability and affects valuation.
Kyle Grieve breaks down Michael Mauboussin’s key insights on combating noise, valuing intangible-rich businesses, using the rule of 40, leveraging checklists and algorithms, understanding base rates, and more.
IN THIS EPISODE YOU’LL LEARN:
00:00:00 - Intro
00:03:00 - How to use the BIN acronym to help you deal with forecasting error
00:14:32 - Four myths in investing (many of which I’ve fallen for)
00:26:15 - Why you must take GAAP numbers on a case-by-case basis due to handicaps of the standard
00:25:07 - How the rise in passive investing is making active investing more challenging
00:33:19 - Why GAAP losers outperform GAAP winners
00:37:14 - Why you should understand the differences between pricing and valuing a business
00:48:39 - Why using assorted multiples will help identify true undervaluations
00:45:50 - How to utilize the rule of 40 in your investing regardless of whether you invest in tech or not
00:49:16 - What to know about the base rates of a public business’s survival
00:58:00 - Why most investments will fail and how to deal with the ones that succeed
Disclaimer: Slight discrepancies in the timestamps may occur due to podcast platform differences.
BOOKS AND RESOURCES
- Join the exclusive TIP Mastermind Community to engage in meaningful stock investing discussions with Stig, Clay, Kyle, and the other community members.
- Read The Consilient Observer here.
- Learn about the BIN framework here.
- Dive into the four myths here.
- Explore valuation multiples more here
- Understand total shareholder returns more here.
- Improve your views on business survival here.
- Follow Kyle on Twitter and LinkedIn.
- Related books mentioned in the podcast.
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