One Up on Wall Street – Peter Lynch Dividend Taxes – US government taxes corporate profits and then corporate dividends at the full rate. Made companies move away from dividends to share buybacks. Share Buybacks – increase shareholder return by increasing EPS. Anyone can Invest – You don’t need to follow smart money you can see the moves yourself as an amateur before the professionals. E.g. Dunkin Dounuts and Dell. Professionals bound by mandates forcing them to invest in certain stocks. Or buy large cap stocks to please the owners of the funds. Acquisitions are normally risky where companies overpay. More risky when company invests in areas unrelated. Share buybacks are safer for investors Formulae to compare growth rates to earnings taking into account dividends: 1. Find the long term growth rate 2. Add the Dividend Yield 3. Divide by the PE ratio <1 is poor 1.5 is okay 2 + is good Be careful looking at book value, which is typically overstated, and companies with high book value are sold off at desperate prices.