Glossary
Key terms for net-net investing.
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Operate where you understand the drivers, risks, and values; pass on the rest.
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Focus on quality companies, moderate prices, and diversification with minimal trading.
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Research-intensive approach focusing on bargains, special situations, and small caps with margins of safety.
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Predicting price paths or averages rather than comparing price to intrinsic value.
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Treat market quotes as offers to accept or ignore, not commands to act.
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Graham's discipline of appraising value versus price based on financial statements and conservative assumptions.
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Graham viewed workouts as businesslike underwritings of terms, timing, and downside.
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Blends equity and debt costs into a hurdle rate for projects and valuations.
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Both are non-cash expenses, but depreciation applies to tangible assets and amortization to intangibles or deferred items.
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A steady-state cash flow figure that anchors valuation beyond the balance sheet.
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A buffer that protects against mistakes, dilution, or weaker assets than expected.
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NCAV per share is the core net-net yardstick for valuing balance-sheet bargains.
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NCAV is current assets minus total liabilities, the core net-net metric.
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NTAV strips out intangibles to show hard-asset backing after liabilities.
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Non-cash charges lower earnings without immediate cash impact; add them back when assessing cash flow but consider their economic meaning.