When I buy a stock, I am actually buying partial ownership of a company. And there are definitely companies that I do not want to be a partial owner of due to their net negative impact to society. Instead, I'd rather support conscious capitalism, conscious consumerism, and socially responsible investments. There is also a competitive advantage when talented individuals want to work for companies that are making a difference.
Impact: The net positive and negative impact to society
Safety: All risks considered like recession, inflation, fraud, bankruptcy, reputation, competition, government, etc.
Bargain: How good of a deal relative to all other possible investments, interests, and earning power
Beauty: Ranking based on the three categories above
How to rank?
It's hard to precisely guess a person's weight, but it's easy to line everybody up and sort them by weight. So similarly with impact, safety, or bargain, it's easy to compare investments and sort them per category.
John Maynard Keynes said: "I would rather be vaguely right than precisely wrong."
Where's the data from?
Financial data on many sites are not reliable enough because they are too automated. I've tried automating data myself from the SEC, and it's too messy.
So instead, I just painstakingly retrieve the most useful data unique to each stock manually, and scrutinize it carefully.
What's adjusted PE ratio?
Price per share is what you pay, and partial ownership is what you get.
The partial owner's portion of profits is called earnings per share.
PE ratio = price per share ÷ earnings per share
adjusted PE ratio = (lowest price per month¹ - adjusted equity) ÷ owner earnings
owner earnings = net income + one-time costs + depreciation & amortization - maintenance capex
maintenance capex = a guess on cost to maintain earnings
¹ except the current month uses the current price
1. Practical Ethics by Peter Singer
2. Conscious Capitalism by John Mackey & Raj Sisodia
3. The Intelligent Investor by Benjamin Graham
4. Investing the Templeton Way by Lauren C. Templeton
5. The Snowball by Alice Schroeder
Why invest in S&P 500?
I don't want to! There are no better choices for me with my work 401K.