Finance

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Why is Johnson & Johnson so much more valuable than Pfizer?

Earlier this week, I looked at the valuations of 5 large pharmaceutical companies: Johnson & Johnson, Pfizer, Merck, Amgen, and Eli Lilly. I was trying to get an idea of which one was the most “over-valued”. Long story short, Johnson & Johnson and Amgen are the most expensive, relative to their asset base. That doesn’t necessarily
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Which big pharmaceutical company is most overvalued?

I want to take a quick look at five large publicly-traded pharmaceutical companies: Johnson & Johnson Pfizer Merck Amgen Eli Lilly Specifically, I want to get a rough idea of how “fair” their valuations are. And I have two important caveats: Johnson & Johnson isn’t a pure pharmaceuticals company. No two of these companies overlap
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Big corporations and Robinson Crusoe have opposite problems

I’m reading The Dao of Capital by Mark Spitznagel. The main idea of the book is that in order to win in the long term, you have to lose in the short term. You have to follow a “roundabout” path to success. Spitznagel’s telling of the story of Robinson Crusoe To demonstrate his point, Spitznagel uses
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How does NVIDIA make money?

About a year ago, NVIDIA’s stock was trading a little under $30 per share. Today, it trades for over $100 per share. That’s a 250% jump, compared to a 19% increase for the S&P 500. What’s going on? In short, NVIDIA is using its top notch graphics processors to do a whole lot more than
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JPMorgan Chase's impressive quarter wasn't that impressive after all

Last Friday, JPMorgan Chase (JPM) reported its 2016 fourth quarter results. The company smashed the expectations of stock analysts. Let’s take a quick look at what actually happened. You should look at these two charts, then tell me what the story line is Before I diagnose anything, I want you to look at two charts. One
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Henry Ford perfectly describes the corporate addiction to debt

In his 1922 autobiography My Life and Work, Henry Ford warned about businesses becoming addicted to debt: I would not say that a man in business needs to know nothing at all about finance, but he is better off knowing too little than too much, for if he becomes too expert he will get into
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Even smart people struggle to talk about "Wall Street"

People talk about “Wall Street” like they talk about politics. Facts don’t matter so much. It’s all about what side you’re on. Frankly, it gets old in a hurry. Even smart people aren’t immune. That’s a big problem. It’s not like you can just filter out the obvious dummies and rely on the professionals. The
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Big banks are uniquely dangerous

Before we jump into banking, let’s start with a personal example. Say you make $50,000 per year. What are some of your biggest expenses? You might rent an apartment. You might buy or lease a small sedan. You might buy a big flat screen television. There are plenty of other one off items you might
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This is how the Minneapolis fed wants to break up the big banks

On Wednesday, the Federal Reserve Bank of Minneapolis proposed a plan for breaking up the big banks. What’s the focal point of the plan? Much more aggressive capital requirements. Capital requirements 101 “Capital requirements” sounds fancy. But the concept is simple. Every business has a balance sheet. On the balance sheet, you’ll find assets and
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How does Goldman Sachs make money?

A couple of weeks ago, Goldman Sachs reported its most recent quarterly financial performance. In short, the company did great. It smashed expectations for both revenue and earnings. In the beaten down world of financial services, this kind of news is especially good. It’s one thing to celebrate a good quarter. It’s another thing to
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