End of Day, Study Time

As I’m writing this, I’m reading Warren’s Annual Letter to Shareholders in 1977.

So far the 2 most important teachings from the oracle are:

  • Being in businesses where tailwinds prevail rather than headwinds
  • Owning an insurance company

Towards the end, Warren speaks of his famous 4 Point Checklist, which helps him decide if a business is a good investment:

  1. Want a business that we can understand, with intrinsic characteristics that give it a durable competitive advantage, people always have trouble with this one (i.e. favorable long-term prospects) management in place must have integrity and talent, lastly, no matter how wonderful the asset is, it’s not worth an infinite price, so you must have a price that makes business sense.
  2. What counts is How the Company Does and it’s really not that, it’s an Analysis of the Fundamental Earning Power of the Asset and looking to that Earning Power to Justify the Price you Pay

I learned a lot from this lol. Hope you did too.

- Saach

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