Thank you, Jenna (and anyone else who was involved in the decision to create this "community")!
I read Hagstrom's book, The Warren Buffett Way, back in 1998 and thought it was pretty good, although I'm not sure how complete it was in illuminating Buffett's thought processes. My favorite takeaway from Buffett is the notion that you should buy good companies at reasonable prices and then hang onto them unless and until you find a substantially better bargain.
Jenna, I think the discussion in the article you reference highlights the biggest problem investors have, which is HOW to value a given company. Accrual accounting only adds complexity to that task. It seems that many, if not most, of the numerical techniques for valuing companies are merely attempts to translate from accrual accounting to a more real-world, cash-based evaluation. I wish publicly traded companies were required to publish cash-based P&L statements and balance sheets. (The statement of cash flows helps but doesn't quite get there.) About the only way to fudge the numbers on cash-based statements is to outright lie about them, and such fraud is much easier to detect than accrual-based shenanigans.
Considering the current volume of cryptic notes to accrual-based financial statements, explanatory notes to cash-based statements wouldn't be any worse.
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Rob Adams
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