In the Full Year of 2020, Altria Group recorded a 98% Return on Equity – way far exceeding the index with 17.17%. In 2021, the achievement is much crazier, the Marlboro maker has a 399% Return on Equity. And it is not a seasonal wonder, Altria has consistently maintained a high level of ROE for a long time. Is its business really that good? Our short post tries to investigate further.Continue reading “Return on Equity: How the number could lie to you”
Why is decision-making important?
Because sometimes it involves money. A lot of.
Decision-making is essential when it involves money. In 2010, Nokia stubbornly decided to use Symbian while all developers join iOS and Android. In 2017, Microsoft adopted a similar approach to challenge the duopoly. The Redmond-based company embedded Windows Phone in its Lumia lineup instead of Android. As you’ve already known, this decision lead to billion of losses.
Microsoft knows that the lack of developer support is the reason why Nokia – Symbian failed. Why did the tech giant still take that approach? It is interesting that under specific situations, people tend to take completely known wrong decisions. And it is not only about corporations. It could also happen at the individual level.Continue reading “Decision-Making: Investing, Business, Career, Life”
This example of the decision-making fallacy gives us a simple conclusion: do not let your former glory ruin your future. Everything will change eventually, we need to adapt.
- After the acquisition of Nokia, Microsoft keeps the Windows (Phone version) as its mobile devices OS. This strategy ends miserably with a $7 billion loss.
- Lionel Messi – maybe the greatest player of all time – relies on his dribbling skill. As the player ages, the sharpness of his play deteriorates significantly.
- Cristiano Ronaldo – Messi’s greatest rival – begins his career as a dribbler, with many tricks, flips flop. But as he ages, he changes his play style. CR7 becomes more passive, waits in the penalty box, and becomes one of the deadliest poachers. He does not dribble much. He becomes much more efficient. His physical peak has been long surpassed, but he keeps delivering prestigious titles for the club and national team.
What do we learn about decision-making here? Let’s elaborate.Continue reading “Example of The Decision-Making Fallacy: From OS to Football”
Key points of Fundamental Analysis of Berkshire Hathaway(BRK):
- Officially, Berkshire Hathaway is transportation, energy, and an insurance company.
- Due to its area coverage and economies of scale, Berkshire’s transportation business enjoys a cost advantage over its competitors.
- Berkshire’s insurance enjoys a switching cost advantage.
- Berkshire’s business is durable, and reliable in the long run, but it is slow. What makes Berkshire’s price rise is probably due to its stock investment and buyback.
Pursuing your body goals and your investing target may share similar problems. No, it’s not the technique or the knowledge. It is misinformation and belief about…that misinformation. These two compose the building block of basic investing mistakes.Continue reading “Basic Investing Mistakes: Lesson from Body Goals.”
Too Long Didn’t Read: for Basic Investing Strategy:
- In the long run, earnings and cash flow matter most.
- An economic moat – or technically, competitive advantage, is a factor that could preserve (or even grow) earnings and cash flow.
- Time plays an important role, a high number of ROIC is useless if it can’t last in the long run. Time becomes the test for ROIC.
How long have you been in the game? 5 years? In the last 3 years, how much have you advanced? This is not only your question but also ours. How long have you been with us? 2 years? How much do you get better by coming to us? Here we’re now making a recap of our article. To remind you what is important, to give you a checkpoint, and to know how our progress in the understanding of the stock market.Continue reading “Understanding of The Stock Market: Misconception”
The complete title of Marry Buffett’s book is Warren Buffett and the Interpretation of Financial Statements: The Search for the Company with a Durable Competitive Advantage. The title contains our favorite subject: Competitive Advantage, one of the most important but rarest topics in investing.Continue reading “Marry Buffett’s Book: Part One. Gross profit Margin.”
So far, we have tried to fix some investing rule misunderstandings. We have redefined and explained many investing terms like intrinsic value, the margin of safety, growth versus value, and others. Today we try to target one of the most used quotes in the stock market: “One bird in the hand is better than two birds in the bush”.Continue reading “Investing Rule Misunderstandings: Birdless Bush”
The ratio analysis mistakes that we compose here show you once again how a shortcut could bring to an inaccurate conclusion.Continue reading “Ratio Analysis Mistakes: Part 1, PER, ROE”