When estimating a company's earning power, it's important to look at its annual earnings over the past business cycle, rather than assuming that its current earnings are representative of future earnings. In Security Analysis, Ben Graham and David Dodd discussed the need to smooth out fluctuations in annual earnings, and we have looked at some reasons for why that is the case. Sometimes, however, properties of a company have changed, and current earnings may actually be a better gauge of a company's earnings prospects going forward.
Gave me a chuckle: 1 books read Should be book. ... - Gave me a chuckle: 1 books read Should be book.
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