What Is a True Luxury Company?
The word “luxury” gets thrown around constantly these days. Marketers, social media influencers, and brand executives use the term because they want customers to believe their products are superior to the competition. And for good reason. Brand power can lead to outsized profit generation and huge returns for stockholders due to the ability of these […]
What Warren Buffett Can Teach Investors About Capital Intensity Analysis
“We still love a business that takes very little capital and, earns high returns, and continues to grow, and requires very little incremental capital.” ~ Warren Buffett Determining and understanding the capital intensity of a business will help you find great investments. A crucial aspect of business analysis involves examining the business model. The analysis […]
Find Quality Companies with Buffett’s $1 Retained Earnings Test
Buffett created a test every investor can use to find wonderful companies. Most refer to the test as “Buffett’s One Dollar Test,” which helps us find companies that generate continuing value creation. In today’s post, we will learn: Okay, let’s dive in and learn more about Buffett’s One Dollar Test. What is Warren Buffett’s One […]
Decoding the Revenue DNA: An In-Depth Analysis of Revenue Streams
Revenue is the most important factor in investing. And most investors focus on revenue growth and profits. But we should also consider the different revenue streams. These different revenue streams drive growth and prospects. Consider Amazon, who started as a bookseller. Now, they operate in many different markets and sectors, like cloud computing, e-commerce, and […]
Navigating the Storm: Understanding Stock Drawdowns
“The real key to making money in stocks is not to get scared out of them.” -Peter Lynch Drawdowns are a part of life for every investor. If you own stocks for the long run, you will experience them at some point. To hold stocks long-term, we must understand drawdowns, their causes, and how to […]
Understanding Where Investment Returns Come From: Yield, Growth, and Multiple Expansion
Achieving financial success in the stock market demands a profound grasp of the three sources of investment returns: Yield, Growth, and Multiple expansion. But how many of us understand those sources? Think of investment returns like a stew with yield, growth, and multiple expansions as the ingredients creating investment success. In today’s post, we will […]
Unlocking Financial Insights: How the 3 Key Financial Statements Interconnect
“Accounting is the language of business.” Warren Buffett This brief quote underscores Buffett’s belief that a deep understanding of financials and accounting remains essential for investors and business leaders. By “speaking” and “understanding” this language, individuals can make informed financial decisions, evaluate investment opportunities, and assess the financial health of companies. In today’s post, we […]
From Investments to Cash: Decoding the Cash Conversion Ratio
Cash conversion is a key concept in investing. It helps investors determine how effective they are at translating earnings into cash. It also helps us better understand the liquidity of the business. Terry Smith of Fundsmith uses it to help him identify quality companies. In today’s article, we will learn: Okay, let’s dive in and […]
8 Steps to Reviewing a Company’s Earnings: A Step-by-Step Guide
Every quarter, public companies allow investors inside their financials in the form of quarterly earnings. The dance between analysts and the company helps investors learn about the goings inside Google, for example. A glimpse into the company’s operations and financials helps investors determine many things. For example, we can learn what might impact the company’s […]
How to Distinguish Between Luck and Skill in Investing
When we succeed in investing or life, we tend to attribute success to skill or hard work. But when things go wrong, we tend to blame bad luck. Well, which is it? In business, investing, or sports, distinguishing between luck and skill can be challenging. We all love stories and want to understand the relationship […]
