BC FINANCE
Saved by @tradrdoc

This is value investor, Allan Mecham.

He dropped out of college at age 22 to start his fund, Arlington Value.

From 2008-2016, they did a CAGR of 30% over 8.5 years!

And in his fund letters, he shared his best frameworks for investing in companies.

Here's a breakdown of each:

 1. Adopt a mindset for longevity

He focuses on variables that affect a business' durability.

Stuff like valuation doesn't matter if the business quality is misjudged.

Since a company's value is determined by its future cash flows...

Hence evaluating its future is key
2. Stay within your circle of competence

Allan is aware that his CoC is tiny!

Thus, he rarely buys companies that he:

• Hasn't researched
• Hasn't followed for at least a few years.

Because the best way to study a business is to observe its execution overtime.
3. Embrace volatility as a gift

Public markets offer you amazing deals you will never get in the private markets!

It's all about being patient.

The underlying value of a business is much more stable than the stock.

So you can buy great businesses that are mispriced!
4. Avoid noise and news

More information can give you a false sense of confidence.

It can create an illusion of "knowledge", and make you think many things are important.

The key is to know what are the 3-5 main variables in the company, and focus on those.

Ignore the rest.
5. Extend your time horizon to see what's truly important

When you look years out, instead of next quarter:

• You place less emphasis on hiccups and fluctuations.

• You don't focus on what 99% of other analysts look at (guidance, beats).

This helps you think more clearly.
6. Dig below the numbers

Not everything that is in numbers gives you the full story.

The real returns are made from great business quality.

Many factors like psychology and customer love are what determines the longevity of the business.

Look beyond the financial statements!
7. Mentally prepare for speed bumps and ugly numbers

Learn to discern between:

Short term speed bumps VS. fundamental problems in the business.

Franchise value can still be firmly intact, even if the company is going through a rough patch.
8. Pick the easy fights

He looks for layup type of investments, basically those that are easy.

Simple to understand.

In this business, there are no bonus points for doing backflips and somersaults in the air.

K.I.S.S!!!
RECAP:

1. Adopt a mindset for longevity
2. Stay within your circle of competence
3. Embrace volatility as a gift
4. Avoid noise and news
5. Extend your time horizon
6. Dig below the numbers
7. Mentally prepare for speed bumps
8. Pick the easy fights
If you like this, follow me here at @heymaxkoh

I share how I crossed 7 figures before age 30, and achieved my own version of financial freedom.

Stuff I tweet about:

• My investing strategy
• Books that inspire me
• How I built high income skills i.e. public speaking

More from Max Koh

Max Koh
Max Koh
@heymaxkoh
I'm 31 years old.

10 years ago when I was 21, I had less than $1,000 in my bank.

If you told me I would cross my first $1 mil at age 29, I wouldn't believe you.

But it's not all about $$.

Here's the top lessons I've learnt about habits, happiness, life and death:

1. Wake up early

I learnt this 4 years ago after listening to Jocko Willink.

I’m not a morning person. Until now I'm still not.

But I force myself to rise early most days.

Knowing you’ve accomplished more than others by the morning is a good feeling.

It sets you up right.

2. Lift weights

Everyone in a competitive field should engage in some form of intense physical activity.

For me I lift weights 5-6x a week. But it could be any sport.

It teaches you valuable lessons like:

- showing up consistently
- putting in the reps
- pushing past boredom

3. Have dreams

I recall watching Tony Robbins when I was 16 years old, and that left an impression on me.

Seeing him speak and inspire others from stage, that’s what I wanted to do.

It gave my life a new purpose beyond video games...

I told all my friends about it.

Anyone who would listen, I publicly declared it.

Probably annoyed many of them.

Looking back, I'm blessed to have found what I wanted to do at an early age.

It gave me clarity in choosing my career, and where I chose to invest my time.
SCREENSHOT
Max Koh
Max Koh
@heymaxkoh
One thing I'm always most excited about as an investor:

Watching CEO interviews.

Over the years, I’ve watched over 100s of them.

Here’s 25 traits I’ve seen in the very best leaders.

You can swipe these into your own framework to evaluate management teams:

1. They don’t rely on external motivation

Not status or money.

Instead, they seem to be driven an inner fire.

Sometimes it’s to make the world a better place.

Other times, it’s to prove themselves right.

And that's why they can keep going even after they're already rich AF.

2. They're not human

They don't see the world like 99% of us

Whether it’s creating a culture that’s a sports team vs a family...

Or thinking of everything from first principles…

They have a different modus operandi.

This helps them see solutions that 99% of us muggles miss.

3. They enjoy founder-company fit

The great leaders are great because:

They’re in a company that plays to their unique personality.

The stars have to align for a great leader to be made.

The product + business model + personality of the leader must match.

4. They give lots of freedom and autonomy

They know how to unleash the potential in their team

They know how to paint an exciting vision…

And then give their team the space to roam free.

They understand that people flourish when you give them room to explore and experiment.
STARTUP
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Max Koh
Max Koh
@heymaxkoh
2 weeks ago, I started reading "Fooled by Randomness" by Nassim Taleb.

WOW, It's been mindblowing!

Thanks to @dvassallo 's recommendation.

Inside, there's a part he talks about how to deal with volatility.

Here’s 6 big lessons that are useful in the current market crash:


Lesson #1:
Negative emotions of seeing your stocks drop > Positive emotion from seeing your stocks rise.

"A negative pang is not offset by a positive one...

Some psychologists estimate the negative effect for an average loss to be up to 2.5 the magnitude of a positive one)...

... At the end of every day the dentist will be emotionally drained.

If the unpleasurable minute is worse in reverse pleasure than the pleasurable minute is in pleasure terms, then the dentist incurs a large deficit when examining his performance at a high frequency."

Lesson #2:
When we zoom out and check the prices less frequently, we are less affected by negative emotions.

Because over a longer time horizon, the market tends to rise more than it goes down.
BOOKS
Max Koh
Max Koh
@heymaxkoh
I'm lucky to attain financial freedom before 30.

I credit Fintwit for my learnings.

Here's 10 key concepts every investor must know:

1. $$ needed to retire
2. Researching a business
3. Reading annual reports
4. Reading earnings calls
5. Criteria of a multi bagger

(Read on...)

6. Holding a multi bagger
7. Economic moats
8. When to buy a stock
9. Earnings vs cashflow
10. Traits of quality companies

Here's my 10 favourite threads on these concepts:

1. How much $$ do you need to retire

Before you start, you must know the end game.

To meet your retirement goals...

How much $$ do you need in your portfolio?

10-K Diver does a good job explaining what's a safe withdrawl rate.

Hint: It's NOT


2. Research a business

Your investment returns are a lagging indicator.

Instead, your research skills are the leading predictor of your results.

Conclusion?

To be a good investor, you must be a great business researcher.

Start with


3. Reading annual reports

This is the bread and butter of a good business analyst.

You cannot just listen to opinions from others.

You must learn to deep dive a business and make your own judgments.

Start with the 10k.

Ming Zhao explains it
FINANCE
Max Koh
Max Koh
@heymaxkoh
"The best investments comes from the best businesses"

One of the investors who's made a big impact on me:

@JohnHuber72 of Saber Capital

I spent days pouring thru his articles and interviews in my early days...

Even had a doc with 20 pages of notes!

Here's my top 15 lessons:

1. You don't need original or unique investing ideas

You can simply wait for great businesses to be mispriced.

And then pounce when that happens.

In the meanwhile, don't dilute your portfolio with simply "good ideas"

Only accept the "great" ones


2. John's investing criteria for idiots

• Easy to understand businesses

• Generate lots of FCF

• Partner with good management teams

And then...

Sit back and WAIT for the fat pitch


3. Distaste for strikeouts > Desire for homeruns

John is okay with not making 10x returns in a short time.

And he has come to accept that.

Every investment strategy comes with its own features.

The key is knowing what they are and making sure it fits your personality.


4. One years results don't mean much

This was taken from John's 2016 letter...

1 year results can be random.

Don't feel too sad if you underperform...

Or get too confident when you outperform.

Zoom out and look at your performance over multi year periods instead.
MENTAL MODELS

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The Profitabull | Invest Better | Think Better
The Profitabull | Inve...
@theprofitabull
It's been more than 60 years since Philip Fisher wrote the investment classic in "Common Stocks & Uncommon Profits".

The book is famous for the 15 questions which one must ask before investing in any company.

THREAD


These are the questions which help us in determining the "quality" of a business.

Warren Buffett has time and again said that he is 85% Graham and 15% Fisher.

Let's have a look at these 15 questions.

P.S.: Stocks listed in this thread are not to be taken as recos.

1. Does the company have products or services with sufficient market potential to make possible a sizable increase in sales for at least several years?

The important point which you must note here is that you must not just look at the size of the company.

You must also look at the opportunity size of the market in which the company exists.

Let's take the case of HDFC Bank. Although it is a huge bank, but it controls just 9% of the total credit market in India, suggesting an enormous opportunity for it to capture.

2. Does the management have a determination to continue to develop products or processes that will still further increase total sales potentials when the growth potentials of currently attractive product lines have largely been exploited?
FINANCE
Mostly Borrowed Ideas
Mostly Borrowed Ideas
@borrowed_ideas
1/ Thread: $GOOG 4Q'20 Update

For the first time, GOOG segmented its cloud revenues/income separately, and overall revenue was >20% in 4Q which led to +7% after-hours reaction yesterday.

Here are my notes from earnings/press release.

2/ In the last quarter, here is the segment-wise growth:

Search +17.4%
YouTube ads +46.0%
Google Network Members +22.9%
Cloud +46.6%

Cloud more than doubled in the last two years.
Other bets losses $4.5 Bn in 2020 (vs $4.8 Bn in 2019)


3/ Operating margin in Q4 ~28%
FCF margin in Q4 ~30%

One of the big takeaways was the core business was even MORE profitable than most investors thought since cloud had -42.9% operating margin.

$GOOG's search business is a good comp for Fed in terms of "printing" money. JK.

4/ "you can track takeout and delivery orders when you book or order from Google Maps"

"More than 0.5 million channels livestreamed on YouTube for the first time in 2020"

"videos in our new Shorts player are receiving 3.5 billion daily views."

5/ Google Pay app is now used by >150 mn people in 30 countries.

Cloud backlog $30 Bn now (from $19 Bn in Q3)

# of Deals >$250 Mn became >3x

Waymo is providing hundreds of fully AV rides per week

Retail searches >3x YoY

Cloud operating losses flat YoY
FINANCE
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Neil Thomas \u725b\u7287
Neil Thomas 牛犇...
@neilthomas123
THREAD: Who are the rising stars of Chinese elite politics in the central Party-State bureaucracy?

For @MacroPoloChina I analyzed last year's ministerial-level promotions to posts in Beijing

TLDR: Ties to Xi Jinping—or a Xi ally—are very helpful! (1/14)

https://t.co/kO2A0Efyq2


Seven politicians were promoted to ministerial-level positions in central Party agencies last year

All are likely to feature on the next Central Committee selected at the 2022 Party Congress

Some could make the CCP's elite 25-person Politburo (2/14)

https://t.co/kO2A0Efyq2


Likeliest for the Politburo is Meng Xiangfeng, new Executive Deputy Director of the CCP General Office

He would replace Xi ally Ding Xuexiang as CCP chief-of-staff if Ding is promoted further in 2022

Meng worked under Xi allies Cai Qi in Hangzhou and Chen Xi in Liaoning (3/14)


Less likely for the Politburo but still important is Jiang Jinquan, new Director of the CCP Policy Research Office

He replaces 5th-ranked leader Wang Huning who led the Party's brains trust for 18 years

Wang remains prominent and will be <68 in 2022, so he'll stay around (4/14)


Other notable central Party promotions include Li Shulei and Liang Yanshun, who both assisted Xi when he led the Central Party School from 2007-2012

Li is a political conservative who is said to be quite close with Xi, even drafting his 2014 speech on culture and art (5/14)
FINANCE
Ram Bhupatiraju
Ram Bhupatiraju
@RamBhupatiraju
One of my fav docs to come back to during all market cycles. Covering Investment principles, checklists, economic cycles/bubbles, value traps & more. Phenomenal compilation by @pcordway👏

cc: @dmuthuk @Gautam__Baid @saxena_puru

Some of my fav content.⬇️

https://t.co/TIkvktVoJC


Pretty good process and checklist.


Tenets from "The Warren Buffett Way"


Some lessons from Ben Graham


Phil Fisher's 15 Questions and 10 Don'ts.
FINANCE
Maureen Fitzsimmons
Maureen Fitzsimmons
@mojos55
@BylineTimes
1. The £22 billion Test and Trace system had a ‘relatively small’ effect on the R-number, a new evaluation from the Department of Health and Social Care has found.
2. EXCLUSIVE Firm Chaired by Government Procurement Advisor Awarded £38 Million Contract –
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When I took on my biggest marketing & events team to date (35 employees) I asked him how the *heck* he did it. Here's what he said and what helped me every day. 🧵

Remember you're leading all the employees under you, but you're not *managing* them all. You're managing your direct reports, which should be 5-7 individuals max. Focus on them.

When you interact with the employees you don't manage directly, get to know them as people first, that'll be the most valuable information in leading them. Remembering everything you learn about them is hard, but doing so will make you a superhero.

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The main importance of the mandir lies in the Linga which is housed in the Garbhagriha of the temple & considered as the only one of such type. It is the earliest Linga discovered so far and it has been assigned to the 3rd century BCE.(Satavahana period) 2/n
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The last Hindu king of Pakistan.

The name Amarkot is known to all in our subcontinent as the birthplace of Emperor Akbar. When Humayun was fleeing from Sher Shah, Rana Prasad of Amarkot sheltered him and this is where Emperor Akbar was born.

#Thread
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They have always maintained friendly relations with the rulers. The Mughal court and the Rana of Amarkot had special respect because Emperor Akbar was born in the shelter of Amarkot Raj. They did not even have to attend court regularly.

2/19

Dara Shikohar provided Rana supplies to Amarkot during his expedition to Kandahar.
But another reason why the name of this Amarkot is inextricably linked with the history of the subcontinent is the partition of the country.
Sodha is the family name of the Maharajas of..

3/19

Amarkot,They were originally known as Sodha Rajputs. Despite possessing a very small kingdom, he was far ahead in terms of wealth and honor. During the British rule, Rana Ratan Singh led the anti-British movement in Sindh. In 1753, the British occupied the state of Amarkot,
4/19

which was his and his ancestral home, and hanged Rana Ratan Singh on a high platform on the walls of Amarkot fort. It hangs in front for a few days. Even today, a folk song called "Mor tor tilaya rana" is very popular in Sindhi language.
After the capture of the fort by the
5/19
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