What I'm Looking For

Quality, quality and more quality

I try to keep the research process simple. I read/watch as much news, annual reports, investor presentations, videos, interviews, etc. on a companies that I think have a unique/interesting business model(s). In addition to a great/unique business model, I want high returns on capital in the past, the probability of high returns on incremental capital going forward and what I think is a reasonable price. I’m a big fan of Charlie Munger’s inversion principle so I’ll tell you what I try and stay from in research and investing. These “investing no-go’s” include: letting my ego get in the way, having an opinion on everything, DCF’s, in-depth spread sheets, constant market insight or commentary, macro trading, using leverage, short term investments and/or trading, finance memes, worrying about taxes, worrying about failure, beating myself up for missing a great business or investment and not being flexible when the facts change. If I think of more I’ll write a post about them. For full transparency, I’ve acted on most of the “investing no-go’s” in the list above but the goal is to minimize them going forward. I’m aware that it’s easy to talk about staying away from the “no-go’s” especially when I don’t have a lot of capital to work with and don’t have to deal with the consequences of losing a large portion of my or someone else’s money. However, I think being aware that the “no-go’s” exist help with framing my investment outlook and thoughts.