“‘Almost 0%’ Chance Stocks Are Higher In 10 Years | Bill Smead”
MRK is a holding; its conservative accounting (expensing R&D) indicates higher true profitability.
we own Merc and Amgen, and we love those companies because they have the most conservative accounting of any major corporations. What do I mean by that? They spend 18 to 20% of of their revenue each year on R&D and expense it upfront.
Expense it. They don't depreciate. It's the most important long-term investment they make. So, their income statement, they are actually much more profitable as compared to other corporations because of how conservative their accounting is.