A justifiable but ultimately flawed investing impulse is to rely solely on the numbers we see from a company rather than thinking about the qualitative aspects of the investment itself. Some of this reasonable. Thinking about the quality of earnings is hard whereas current numbers are easy—anyone with an internet connection can pull up a spreadsheet and see Exxon’s $0.63 quarterly dividend backed by profits that are usually 4-5x as much. It’s much harder to look at the quality of those profits—personally, I get excited seeing the fact that Exxon is acquiring 21% more in reserves than it drills out of the ground, and I like to see the company’s slow transition from relying on liberty-suspending-mentally-unhinged third-world despot to do oil business, and shift some of that work to Canada.

My guess is that a lot of this has to do with the unquantifiable nature of earnings quality—okay, we all … Read the rest of this article!