These are the most important aspects I look at when researching a stock:
-The nature of the business
-Management and leadership
-Economic Moat
This is how I go about doing this๐
[THREAD]
-The nature of the business
-Management and leadership
-Economic Moat
This is how I go about doing this๐
[THREAD]
1/ The Nature Of The Business
Understanding how a business operates is central to investing in the stock market.
If you can't understand a business, there is no point investing in it.
Usually, I read annual reports and presentations to get a rough idea.๐
Understanding how a business operates is central to investing in the stock market.
If you can't understand a business, there is no point investing in it.
Usually, I read annual reports and presentations to get a rough idea.๐
Look out for these aspects when reading a report:
-How the business makes money
-The history of the business
-Products & Services
-Customers
-Suppliers
-Future Prospects
-How the business makes money
-The history of the business
-Products & Services
-Customers
-Suppliers
-Future Prospects
2/ Management & Leadership
This is the most important part of any business.
A great leadership team will define where a business is going.
Culture, strategy and decision making all come from leadership & management.
So, how can investors research management?๐
This is the most important part of any business.
A great leadership team will define where a business is going.
Culture, strategy and decision making all come from leadership & management.
So, how can investors research management?๐
It is a matter of getting the right people on the bus and the wrong people off the bus.
A small team of A+ players can run circles around a giant team of B and C players.
Generally speaking, I always look for level 5 leaders.
A small team of A+ players can run circles around a giant team of B and C players.
Generally speaking, I always look for level 5 leaders.
Level 5 leaders usually have these characteristics:
-Never take responsibility when things go right.
-Blame themselves when things go wrong.
-Modest, not boastful.
-Quiet, calm determinism.
-Unwavering resolve to do what it takes to produce the best long-term results.
-Never take responsibility when things go right.
-Blame themselves when things go wrong.
-Modest, not boastful.
-Quiet, calm determinism.
-Unwavering resolve to do what it takes to produce the best long-term results.
You can research management by analysing CEO interviews, radio shows, podcasts, shareholder letters and more.
If you would like to take it a step further, you can analyse how much leaders use the word "I".
You'll be surprised to see how many times level 1-4 leaders say " I".๐
If you would like to take it a step further, you can analyse how much leaders use the word "I".
You'll be surprised to see how many times level 1-4 leaders say " I".๐
You can also research management by analysing ESG ๐
3/ Economic Moat
Simply put, an economic moat is a long-term competitive advantage.
It keeps a business and all its resources safe.
If a business has a growing moat, I like the business even more.
If a business has no moat, I do not consider buying.
Simply put, an economic moat is a long-term competitive advantage.
It keeps a business and all its resources safe.
If a business has a growing moat, I like the business even more.
If a business has no moat, I do not consider buying.
Examples of economic moats include:
-Cost Advantage
-Size Advantage
-High Switching Costs
-Intangibles
-Soft Moats
-Cost Advantage
-Size Advantage
-High Switching Costs
-Intangibles
-Soft Moats
You can read more about these examples here๐
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-Investing๐
-Market Research๐ป
-My Financial Freedom Journey๐ธ
-Educational Tweets๐
If you align with this, drop a follow๐
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