SECURITY ANALYSIS - FINANCIAL STATEMENTS (BY BENJAMIN GRAHAM)

[@TheSwedishInvestor]

Playlist of the full Security Analysis series: bit.ly/2vNzkw7

[@tensevo]

Great video series, may I ask what software to do the story board?

[@_Mute_]

I am so glad you decided to cover this book. 2 weeks ago I said that this channel deserves to be a lot bigger. You we're at 10k subs then and 17k today. I've already made a 70% return and I am all in on this bullish channel! You have only began to see the pop for your series my friend!

[@TheSwedishInvestor]

I hope you were able rob some of those people who's been trying to short the TSI-stock for a while now 😉

[@sunspun017]

Agreed, If the content qulity continues, it should reach a million in 2 years. It would help if the channel gets a shout out by a more popular channel.

[@phineaspambianchi7605]

This channel is undervalued, great content man.

[@TheSwedishInvestor]

Let's hope for a higher P/B multiple in the future (persons subscribed/book review)

[@Potatoroomr]

Let’s keep this channel a hidden gem

[@clintmax7734]

That’s speculative

[@mohamad-abdo]

Seriously i expected your content to have millions of subcribers..the value you provide is immense..extremely underrated . I even read the books and then come to watch your takeaways on them and surprisingly, I find that you covered nearly 90% of the true value of the book and thus i started watching your takeaways instead of wasting days reading. Super thankful for your content man

[@TheSwedishInvestor]

Love this comment, thanks a million mohamd khaled!

[@purugogoi7167]

Best youtube channel for financial knowledge. Great interpretation of the books. Not being a student of commerce n trying to understand these bibles of investment are very hard. N your channel lend me a great helping hand. God bless you my friend.

[@TheSwedishInvestor]

Comments like this one is part of the reason why I keep making these videos. I appreciate it Puru Gogoi! A lot! 🙌

[@blaquiere141]

In fact it's the free cash flow that must be used to calculate intrinsic value ! Like you said, earnings may be manipulated. Furthermore, earnings show what has been sold on paper, but a piece of it will never be paid by the clients that will go bankrupt. That is another reason why free cash flow is the tool to value a business : how much money went in and how much went out for real, not in a manipulative of a non funded way... You can use operating income (Income Statement) if for reinvestment purposes, the company's cash flow turned out negative, but it's not representative of the cash that comes in and the cash that comes out. For example : UNH TTM Free Cash Flow = 19,126B$ vs UNH TTM Operating Income = 21,942B$. You must always choose the option that is the closest to the reality !

[@RashidPremier]

More power to you from Pakistan. Beaning a commerce graduate it was my wish to learn and understand stock market but i was unable to do so. You have set a stepping a stone for me.

[@RK-ig5hu]

can't believe this channel has not yet reached 1 million subscribers! The Swedish investor makes excellent content that I regularly visit, sometimes multiple Times

[@darxcide7375]

THIS IS WHY I AM A SUBSCRIBER. GOD BLESS YOU SWEDISH!!!!

[@TheSwedishInvestor]

Cheers Darxcide 😍

[@fernandasouza.k3202]

Awesome review. Fear is the greatest barrier to human growth. Once you overcome all of your insecurities and voices in your head, you can finally conquer ANYTHING! I'm glad I met Winchester he's helped me deal with Fear in the Financial Sector

[@007optionscableguy4]

The testimonies of those that have benefited speak loudly enough, don't you think?

[@chessdad182]

Analyzing financial statements is fun. Like hunting for the secret hidden in the numbers.

[@TheSwedishInvestor]

Indeed! 😁

[@PhillCurtis]

I'm pretty close to having watched every video from this channel. Thanks for all the effort you've put into it. I'm really excited to see what you'll do next!

[@momenttom4969]

This channel is a great investment opportunity, as it is trading below book value and has no jingles!

[@vermasean]

Love the intro....and everything else!!

[@booksbrains1249]

I am addicted to your channel , and ur English language is amazing

[@scjw1959]

so good thank you 5. The importance of capitalization structure was something I could not get my head around but you explained it very well.

[@nathanford7490]

Can you explain a little more how you calculated the Y2 total assets please? I do not understand where you got the numbers.

[@TheSwedishInvestor]

Nathan here follows how the calculations have been made. The key to this is that the people treat depreciation of their assets (computers) differently. A: At year 0 he had assets valued at $2500. He earns $500 per year, but will write off the value of his computer by $500 per year too (in this example I've pretended that a computer has a lifetime of 5 years and that it is worthless after that point). That means $2500 + $500 * 2 - $500 * 2 = $2500. $1500 in a 2 years old computer, and $1000 in cash. B: At year 0 she had assets valued at $1250. She earns $500 per year, and will write off the value of her computer by $250 per year. That means $1250 + $500 * 2 - $250 * 2 = $1750. $750 in a 2 years old computer, and $1000 in cash. C: At year 0 he had assets valued at $1250. He earns $500 per year, and will write off the full value of his computer in year 1. Now this doesn't mean that the computer has become worthless, it just means that it will look like that in the balance sheet. Person C still holds a computer that is worth as much as person B, which is $750. Also, he has $1000 in cash, so the total value of his assets are $1750, just like person B.

[@rigidlyrics6053]

@@TheSwedishInvestor okay thanks for answering. i was so confused by this. and i still am a bit but i get what you’re doing with the numbers. my confusion comes from the disconnect between person B and C. After Y1 the value of the computer on C’s books is 0. So why are you still factoring the computer value of person B into the total value of the assets of person C? After all , person B chose to depreciate their computer by the arbitrary amount of 250 per year for 5 years when they could have chosen to do it in a faster amount of time. So using the same formula you gave us that’s 1250 + 500 * 2 - 1250 = 1000 So his total value should be 1000 after Y2, not 1750, no? Why give additional value to person C on the books based on what person B’s books do? I understand that in B’s books her computer is worth 750, but that’s because she chose to represent her numbers that way. C chose to depreciate his computer in Y1 by 100%, so on the books his computer is worth 0 no matter how you slice it. You can’t go back and give him additional value of 750 if he already wrote it off just because person B’s computer is still worth something in her books. You get what i’m saying? You’re giving him an extra 750 but you’re breaking your own rules in this example to do it. Can you clarify this for me, please?

[@griffinhalbert154]

Your channel is great man. Great concise reviews, value focused, and good comedy at the same time. The bit about the pronunciation of Graham was gold😂

[@SaveDemocracy19]

The Swedish Investor, you’re doing a great job. If possible please make series on warren buffet letters to shareholders.

[@TheSwedishInvestor]

Great suggestion Atul Panpatil! All I can say is: Stay tuned!

[@2023elevate]

Great videos.

[@MartinMarchev]

Dude, you rock! Seriously! Best channel on KZbin!

[@TheSwedishInvestor]

Wow thank you Martin Marchev! I appreciate the support!

[@ivelinamladenova5941]

Your KZbin channel is suuper helpful! Thank you so much for making these videos!

[@TheSwedishInvestor]

I appreciate it Ivelina Mladenova! 😁

[@MegaSumit]

Amazing explanation buddy thanks for this

[@iAnkit20]

I have learn so much from your videos. Really appreciate it . Keep up the good work . God bless you 😀

[@TheSwedishInvestor]

I'm glad I could provide some value for you Bunty Patel! Hope to be able to produce more for the future.

[@gracefultowels3283]

Which is more important? A highly profitable business and higher pbvr or lesser profitable business with lower pbvr? I noticed Warren Buffett invested in Apple and it is not undervalued from it pbvr and pe ratio. Keep up the amazing work!

[@kopongkopols8527]

CRUSHING IT , 4 HOURS WORKWEEK AND TOOLS OF TITANS ALSO. THANK YOU!!!!

[@itsnotoktolie6310]

I really enjoy your book summaries. I would like you to do a summary of the book; margin of safety, by Seth Klarman. I know it can be hard to find the book, but I think you can find it as a pdf from internet. Greetings from another investor :)

[@TheSwedishInvestor]

I will look into it, thank you for the suggestion!

[@ianaverybrendel]

This is excellent. Thank you!!

[@T0mkisss]

Wait. Did you say that are *valuing* company B 20% higher than A because it's good that it has to pay 20% of its earnings to bond holders and will also have to eventually repay that debt (4 years worth of EBIT)? If you own the whole of A and the whole of B and both grow revenue from 500 to 600 - you will see bigger % growth in earning in company B, but you would actually getting 600 net from A and only 500 from B.

[@Lietonator]

This is such a great series! I've dreaded studying the Security Analysis myself, but your videos make an awesome companion for it - tack så mycket! (Heh, at 0:45 the subtitle says "Benjamin Gray Ham's masterpiece".)

[@dilpickel22]

Thank you very much for your Videos I have learn so much! These are a lot of work and it is very much Appreciated! Hello from Canada ya crazy Swed love ya! I want to come for a visit one day for sure

[@TheSwedishInvestor]

Thanks a ton for the support Dylan Dean! 😁 I appreciate it!

[@eliosgreek8028]

Benjamin Graham act reminds me pink panther scene " I would like to buy a damburger "

[@jajatsudrajat6331]

Thank you for this, so useful

[@rewiredbyadhd]

Hi man, I love your content, thanks, you really help us a lot. I don't know if you have pdf files of your videos or anything but, I would love to print the content with the images because the transcript doesn't offer me that. I've been watching this series since yesterday and I have a little black notebook for the most important parts, and that's everything🙂 and in order to write the content, a 20 minute video becomes a 1h video so what I'm asking is, do you have this content in pdf files please? 😢 Where and how can I access? I would love to be able to print it out and watch your videos with the file in my hands and take notes from there. Also, do you have a podcast? I would love to hear an episode from you at least once a week.

[@boboryan1012]

4:22 I think the total assets calculation is wrong? For Company A, the total assets in Y2 should be 2,500-2*500=1,500. Why do we have to add the retained earnings of $2*500? Similar goes with Company B. For Company C, the total assets in Y2 should have been 1,250-1,250=0? As the fixed assets have been totally written off in Y2 already?

[@TheSwedishInvestor]

I'll try to give some clarifications here, good that you are asking. Cash are a part of your assets, that's why retained earnings are left in for all companies. When it comes to the computer, I've suggested that 5 years is the "correct" way to write it off, after 5 years it is basically worthless and you must replace it in this theoretical example. When considering which company to buy, you only care about the economics, not about the accounting. Company C still has as much assets as company B, in terms of economical values, and that's the only thing that you should care about while investing. Accounting sometimes doesn't represent the reality well enough.

[@boboryan1012]

The Swedish Investor this is very helpful, thank you so much. Im learning a lot from ur channel, keep up the good work!

[@c2225]

@@TheSwedishInvestor How could company C earnings be 5$ per share? It spent more money. More depreciation.

[@jaivideocorner8357]

Absolutely brilliant work 👍👍👍

[@businessman1060]

Does using Free cash flows instead of Earning eliminate all this Earning manipulation?

[@TheSwedishInvestor]

Yes, checking cashflow against earnings is a good idea. I think I mention this in my summary of "Financial Shenanigans", check it out if you want!

[@ashokkt01]

@swedishinvestor .Most amazing thing is that we are hooked to your videos... I would like to know average retention time ( on an average how long people Stick) to your videos.... I have probably veiw 8-10 of your videos and probably watched without blinking and sometimes twice

[@TheSwedishInvestor]

Haha, I would like to know such stats as well, but it is quite difficult with the tools that KZbin provide today unfortunately! I know what % that plays the next video, but not whether people stick around somewhere else on the channel.

[@ayushzaveri8193]

The Total Assets year 2 formula you've used is a bit complicated. The subtraction gives you a lower value in each case. Regardless, I used the fixed assets - depreciation + earnings formula and got the exact figures you did. Great video, otherwise. Learned a lot

[@hasanh.eruslu9001]

I was looking for this formula, thanks!

[@yexuian1997]

Thanks for the answer, hopes that this will be pinned to avoid confusion for amateur like us 😂

[@realestalex2728]

Are these misrepresentations of earnings still common today in a post-Enron world with thighter audits and regulations??

[@DanielNyong]

Yes I see them all the time, it’s very confusing if you’re just starting out. That’s why I go straight to the Cash flow statement.

[@systemconsultingsa]

Excellent content. Congratulations !!!

[@pnatgrendy]

I love your vids and the pronunciation lesson was hilarious

[@TheSwedishInvestor]

Haha, glad you liked it pnatgrendy!

[@AlexVoxel]

Great video, this was very useful!

[@MrEaglenator]

Great explanation and examples!

[@hongboguo2956]

I still can’t get for capitalization why company B is better than company A. Yes, if revenue increase or decrease 100 dollars, because the earning of B is smaller because of interest, therefor the percentage of increase or decrease will be bigger. But the real gain or loss revenue will still be that 100 dollars. How can B is better? Anyone can explain?

[@Bob-yr1iz]

great video

[@sachinbhadarge8239]

What was the formula you used to deduce the total asset value of the 3 youtubers in takeaway 1?

[@rhysmartins8936]

Great content as usual Man , keep it up !!

[@TheSwedishInvestor]

And you're a great supporter as usual Rhys Martins 😁 I really appreciate it!

[@Dggb2345]

Great overview

[@OurWorldofDanceSport]

What was that in the beginning?😂

[@57broski]

After the first minute, I had to pause the video just to check the comments on that little skit lmao.

[@OurWorldofDanceSport]

@@57broski 🤣

[@nalangekrushna]

Hi @swedish Investor, I usually understand your point in this videos but how accelerating depreciation will help a company as the complete capital expense is already written down in first time but the asset is still in use. How it will affect us as investor. Can you please elaborate in more details on that point.

[@TheSwedishInvestor]

Hey Krushnakumar! Accelerating depreciation can help a company to pay less taxes in that period, moreover, it's a way for a company to "save for a rainy day". Maybe 2020 was a great year for the company, so it tries to prepay some of the expenses (the depreciation in this case) so increase the chance that 2021-onward will be profitable as well

[@ayushzaveri8193]

With regard to misrepresenting earnings, don't auditors make sure this isn't done and that the financial statements represent a true and fair view of the business affairs? Sure, they check on a sample basis, but are not large contracts, with material effects on financial statements more likely to be audited for accuracy?

[@alexbright7735]

Hello first to the video. Love the content.

[@TheSwedishInvestor]

Cheers Alex Bright! 😁

[@jesuschrist3.146]

I have a doubt sir i analyzed a company its future growth is not much but high cash flow duopoly business model its a demat account holder company by gov price power is not much why i invest plz reply?? Super vedio thanks ftom india company is cdsl thank u god bless

[@TheSwedishInvestor]

Thank yo Priyotosh Konai for your support! Unfortunately, I cannot give advice on specific stocks, but I hope that some of the videos may help you in coming to a conclusion on your own. Cheers!

[@Ferrotandil]

4:21 I did't get it...Total Assets company C = $1750 ??? You took $250 depreciation yearly of company C, Why?

[@peaceandquietude4195]

I have found the multibagger

[@shynnsup8383]

Hahah that's actually you? Awesome! Funny intro :D

[@luffy4091]

My mentor Benjamin Grey Ham

[@eddiehan__]

Very confused about the example for number 2 (misrepresenting earnings). Public companies typically use an accrual method of accounting, which is then audited before release. Arbitrarily claiming revenue or expenses prematurely (year 3 revenue claimed in year 1) would go against those accounting standards. Not only would reporting 3 years of income into 1 year be grossly negligent and deceptive, but it would be in many cases be corrected by the auditor. Because the increased cash position is already reflected in the cash flow and balance sheet, what would be the incentive for reporting that in earned revenue for that year? Seems quite unrealistic. Am I missing something here?

[@TheSwedishInvestor]

Hi Eddie Han! There are several ways that companies can ramp up revenues that are questionable: - Recording revenue when future services remain to be provided - Recording revenue before shipment or before the customer's unconditional acceptance - Recording revenue even though the customer isn't obliged to pay - Selling to an affiliated party etc I recommend Howard Schilit's book "Financial Shenanigans" if you wish to learn more about the details. Unfortunately there are a lot of shady things going on even though annual statements are audited.

[@eddiehan__]

​@@TheSwedishInvestor Thank you for the response! Just very confused about why accrual standards would be violated in order to show a stronger position on revenues/expenses for one year, at the expense of next year. The chain of effects would make this too much risk for too little reward. Upon first glance, looks like bad accounting! I majored in accounting at university, so I'm aware about cases of shady auditing (Enron) and selling off short term assets to boost revenue in time for end of financial year. But this example seems very counter-intuitive at first sight, even if the objective was to make statements look pretty in the short term. There are easier and more legitimate ways to do that without risking malpractice in accounting. I'll look into the source you provided, but would be curious to know about cases where this has happened. Great channel btw, appreciate the work going into these videos!

[@Rakso18901]

Why would you trust the market enough to take its madness for actual accurate equity valuation? I doubt that every Graham's theory would adhere as well in these times as they would have in his.

[@glorialaborde1541]

I hear Mit Romney's voice each time I look at my portfolio "you dont even pick winners and loses you just pick the losers." Not withstanding great video

[@Noel-wt9qo]

Vilken broker avnvänder du dig av? Jag använder avanza nu men undrar om du föredrar någon annan. Din videor är lärorika! Tack

[@TheSwedishInvestor]

Tack Noel, roligt att höra! Det är väldigt beroende av vilka typer av investeringar som du vill göra, men jag skulle säga att Avanza duger fint (använder också dem) för alla investerare som har lite längre tidshorisonter.

[@momenttom4969]

Hi! Which chapters (roughly) is this video about?:)

[@kayakileci322]

D not forget David dodd co- author of this book

[@MrFrankReynolds]

nice video. how do you create these animations, what tool do you use?

[@hienminh2086]

excellent!!!

[@ganesanls8723]

Wonderful

[@newhandle222]

Can any one help : How we reached to Y2 total asset at 1750 for B & C ?

[@tensevo]

This is why you only invest in companies with a 10 year track record of strong earnings and growing shareholder equity.

[@nickmoody3318]

can I have the slides for revision?

[@GiangNguyen-js4we]

thanks you video

[@Aisitt]

You're like Forsen, but you slang KNOWLEDGE. Thx sir.

[@TheSwedishInvestor]

😁🙌

[@GanpatiRam]

Thank 😊

[@30bangash]

making good videos

[@TheSwedishInvestor]

🙌

[@kinobk9854]

it’s a bit complicated I don’t understand most of number you get. When you talk about 2500$ asset then 2.5 and stuff

[@TheSwedishInvestor]

The $2,500 is the price that KZbinr A bought his computer for. $2.5 is the earnings per share of KZbinr B. $250 in earnings (revenue - depreciation) divided by 100 shares.

[@becomingaconsciousman]

Using revenue - depreciation would give you negative number for C. Where does the $5 come from?

[@Mait15121992]

@@becomingaconsciousman did you get where does $5 come from?

[@Mait15121992]

@@TheSwedishInvestor Can you please explain why $5 eps for youtuber C ?

[@bhattsahil89]

​@@Mait15121992 Since KZbinr 2 already put his entire fixed asset of $1250 in the balance sheet and went into a loss for the 1st year this cost is settled. Now if you decide to invest in Y2 - there would be no fixed costs in the balance sheet and just revenue leading to the 100 shares getting distributed with the $500 in revenue at $5

[@angjelosmane9025]

Can anyone help me understand the Capitalization Structure?

[@TheSwedishInvestor]

Angjelos Mane, it's about how a company has been financed. For example, you might buy a store using only shareholders' capital (equity), while someone else might buy a similar store using both equity and bank loans (debt). Then your businesses will be the same, but your capitalization structure will differ.

[@sukoshikanatomo]

Benjamin Grey Ham

[@kopongkopols8527]

I JUST WANT TO REQUEST FOR A REVIEW ON THE BOOKS OF MARK MINERVINI. GOD BLESS YOU. I LOVE YOUR CHANNEL

[@TheSwedishInvestor]

Bless you! Mark Minervini is on my list, but I have some other books on the list that I must check first bro 😊

[@kopongkopols8527]

@@TheSwedishInvestor its okay. i understand. but still, you are the best book summary channel. haha i compared you to other channels but you are the BEST!!!!!!!!!!! KEEP IT UP/!!!

[@alext1723]

"I would like a hamburger" :)

[@sagar_m]

1:22 5:05 10:09

[@octam5409]

say benjamin graham......me: "breakfast"

[@GinoYouTube]

I like your videos, but just to correct your pronunciation of "Benjamin GraHAM" it is pronounced as "Benjamin GRAM"

[@Uday777]

Grey Ham

[@BatistaR0X]

the h is silent..

[@andrew7693]

😂😂 “graaaaayham?”

[@richardtaylor6341]

Lol there is no ham in a gram 🤔🤷‍♂️

[@abogaux]

Why so handsome ? 😍

[@TheSwedishInvestor]

Haha cheers Joao 🙌😁

[@SK-zm8iu]

Hahah i would like to buy a hamburger

[@nehabhati2958]

couldn't understand anything lol

[@Hshjshshjsj72727]

time is money . the unfunny skit at 1:19 is totally unnecessary