Saturday 31 January 2015

Understanding an economic castle

Castle and Moat

The main objective of a business is to make a return on the invested capital. That return on capital can be measured in cash in the bank or some other social good, but either way, there must be some benefit to be had that contributes to the bottom line and impact the intended target audience of the business. 

A competitive advantage is what the business must strive for to continue it's merry way into profit land and stay in that profit zone. Bruce Greenwald provides a very good understanding of what a competitive advantage ought to look like in his book Competition Demystified.To successfully do this, the business must design a castle from which to perform its business activities and protect its business space with a moat to survive. The taller the walls of the castle, and the wider the moat around the castle, the greater the likelihood of the business surviving will be in the long run.

When buying a business you must consider the economic moat of the castle of that business before you invest your capital.

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FII


Thursday 22 January 2015

Simple does it Investing


If you should examine the history of how successful CEO became a success for the company they shepherd, you will see a consistent pattern. Their simple objective is to allocate the company's capital where they know with some calculated certainty what the long term return can be provided they allow the passage of time. Patience is indeed a virtue in investing or should I say a prerequisite.

William Thorndike says it best in his book The Outsiders . He looked at eight CEOs, all of which operated outside of Wall Street in a small corner of town. The investing approach is as simple as allocating capital.




Simple does it investing starts off with finding a simple model of allocating capital with enough margin of safety to avoid the permanent loss of capital and satisfy a near certain return on the capital.

Take a look at the link above from Base Hit Investing.

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Feel free to ask questions and make comments.

FII



Sunday 18 January 2015

Richest Man in Babylon

It is the beginning of a new year and the first two weeks have past. Most new year resolutions are under the threat of not getting executed in fullness. Some of us started off with a bang, and some of us started off with a flurry and not to mention a lukewarm start for some of us.

May I remind you of your resolutions. We can only achieve the desired outcome with a strong dose of stick-to-it-ism and a complete dismissal of procrastination.

My goal this year is to become the Richest Man in Babylon and I mean it, seriously. You noticed I never said resolution, but my goal? Not to losing weight, not to having less of anything, but on being the Richest Man in Babylon. Go out and get the book and join me on this journey.

Warren Buffet is one of the richest man in the world and who better to copy?

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Feel free to ask questions and make comments.

FII    

Sunday 11 January 2015

Five Good Questions by Jake Taylor - Part Two Video

You will find Five Good Questions (Part two) interesting to watch. Mohnish Pabrai and Guy Spier share some investment insights on investment.

Feel free to ask questions and make comments.

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FII

Friday 2 January 2015

Five good questions by Jake Taylor

You will find Five good questions interesting to watch. Mohnish Pabrai and Guy Spier share some investment insights on investment.

Feel free to ask questions and make comments.

Like and share with ten of your friends.

FII