This is the time of year in which most media websites review and share with their readers their most popular articles. If I was to use the same definition of popularity as the New Yorker - time spent on the article - the list below would be completely different. Instead, I highlighted the articles that I often looked at in 2018 as I found them either useful or simply enjoyable to read.

Written by:

Noam Ganel is the Managing Director of Pen & Paper, a value-oriented stock research publication. Subscriptions are now available. He also serves as  Vice President in Capital Markets at Silvergate Bank and holds the Chartered Financial Analyst (CFA) credential. Click here for frequently asked questions.

Favorite Articles in 2018

The Most Useful Articles

December 28, 2018

This is the time of year in which most media websites share with readers the most popular articles. If I was to use the same definition of popularity as the New Yorker - which is time spent on the article - the list below would be completely different. Instead, I highlighted the articles that readers had mentioned were either useful or simply enjoyable to read.    

First article

5 Myths About Stock Investing: How to Avoid Faulty Assumptions About the Stock Market

In February 16 I wrote about four stock myths. The first myth is the association of risk and return. To achieve a higher return you need to research stocks and to understand business models. The second myth is the definition of risk, which should be the probability of losing money and not whether a stock price is up or down. The third myth is that a financial advisor will change your financial destiny. I argue instead for self-ownership and accountability in financial decisions. Finally, I explain why you should care little whether the stock market is up or down. I argue for a yearly plan of stock investing and sticking to it.  

Second article

Written in March 2, Treasury Stock: If the Return on Equity Is Too Good to Be True, was an unpopular, barely read article. But it is one of my most important essays of 2018. In this somewhat technical article, I describe the adjustment of treasury stock and how the reported financials hide an economic truth. The point of the article is to remind you that reported financials are the starting point to understanding a company's economic reality.    

Third article

Written in March 23, in Frontier Communications: Where the Financials Statement Reveals Little Economic Reality, I described why I bought the common stock of Frontier Communications. This article serves as a reminder that I need to spend more time reading financial footnotes. While in the article I focused on the goodwill impairment charge and the change in dividend policy, I hardly looked at Frontier's right side of the balance sheet. I was eager to buy the stock and this was a mistake that cost me a lot on paper. My cost basis is about $6 a share and the stock is now trading for $2.50. Ouch.

Fourth article

If I was told that I could take only one profitability ratio to a remote island, it would be the return on invested capital ratio. Written in May 25, in Return on Invested Capital: An Incredible Ratio to Examine Profitability and Performance I show how companies that demonstrate a consistent positive return result in an uptick in the stock price, and that the inverse is true as well. When companies return on invested capital ratio is poor, their stock price is penalized.

Fifth article

Who would have thought that buying stocks would make me more health conscientious? Written in August, In Lifeway Foods: Why I Am Long Probiotics, I mentioned the purchase of LWAY simply because I loved the product and because LWAY stock was listed in the 52-week low list, just as I was reading about the benefits of Microbiomes. Lifeway is run by honest management that is heavily invested in the company and carries little leverage, and I could not be happier about the purchase. Even though I noticed the other day that Trader Joe is now selling its own brand of Kefir milk.

Sixth article

Make Equity Great Again: The Case of L Brands is one of my favorite reads of 2018 because, in the 1,000 or so words, I incorporated most of my investing philosophy. In the article I describe why I think that reported financials hide an economic truth and how adjusting the intangible assets we still get a conservatively leveraged company. The article includes topics such as return on invested capital and treasury stocks, topics that I discussed in more depth in other articles.

Seventh article

Readers of Pen & Paper know that if there is one advice I have for students who are interested in the investment management profession, it is to register for the CFA program. It is a three-year rigorous study plan that will forever change how you manage time and how you understand and advise on investments. In this talk to the new CFA charterholders of San Diego from November 16, titled Watch Your Step! My Thoughts for New CFA Charterholders, I discuss what I learned about investing from the CFA program and how it changed my life.  

Eighth article

It is one of my guilty pleasures to read self-help books. The typical flow is that I read the advice the author is encouraging the reader to follow; I get excited about how it may change the way I think, feel and act in the world and the guilt parts comes in - when I realize that few weeks have passed and nothing has been done on my part. But Cal Newport's book, Deep Work, is different. Written in December 1, in Begin with the End In Mind: How to Use Deep Work in Stock Research, I assure the reader that I will follow through. That it's been weeks since I read the book and have yet to execute on a single action item is a different story.

Defining popularity by time spent reading

Finally, for the curious reader, if I was to sort the list by popularity as defined by the time spent on each article, the following list would arise:

Tupperware Company: A quality product. But shareholders should be wary of the debt level

Adaptive Markets: A new theory to replace the efficient market theory

General Electric Company: GE's world is a fairy tale story that will not end well  

Free Cash Flow: Revenue is vanity. Profit is sanity. And cash is reality

Return On Invested Capital: An incredible ratio to examine profitability and performance

5 answers to the most common questions: This article is about why I am doing

Vanguard 500 Index Fund investor shares: Why I bought one share

Seritage Growth Properties: Financials metrics are worth more than a thousand words