Time to Refocus on the Balance Sheet

Over the past couple of years, as stock prices have continued to climb higher, investors tend to pay more attention to the income statement. To be sure, earnings growth drives investment returns, but my concern is that investors are focusing too much on the income statement, and the balance sheet is acting as a sidekick. Given today's stretched equity valuations, investors should refocus more attention on the balance sheet.

A strong, healthy balance sheet is the defensive line of a business. And as my favorite football coach, Nick Saban of Alabama (I'm a Georgia Bulldogs fan at the core, but I think Saban is a gridiron genius), demonstrates time and time again, most recently last week against LSU, defense can often be the best form of offensive. A strong defense will protect you during the times when your offense is not at its best. ...391 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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