China Index has corrected ~40% since its peak

It's the weekend!

Grab a cup of coffee, in this thread I will explain

1. What a cash flow statement is?
2. What does it tell you about a business?
3. How to analyze one?

Examples included various Indian companies.

Let's dive right in.

Cash flow statement is a financial statement published by a company every quarter and annually.

It comprises of all transactions that a company does in cash or cash equivalents.

*Cash equivalents are other liquid assets that can easily be sold for immediate cash.

This is what a typical cash flow statement looks like

Cash flow statement is important as it gives you transparency into how the company utilizes its cold hard cash generated by the business.

Because we are following actual cash, there are very few accounting tricks that can be employed in this section.

A cash flow statement has three main parts:

1. Cash Flow from Operations (CFO)
2. Cash Flow from Investing (CFI)
2. Cash Flow from Financing (CFF)

Let's dive into CFO in detail.

*CFI and CFF will be covered in a separate thread

It's the weekend!

Grab a cup of coffee, in this thread I will explain

1. How to do Industry Research?
2. How to research a Company from scratch?
3. How to determine Margin of Safety and build an Investment Case?

Lets dive right in.

The most frequent question I get asked is - How should I research an industry or a trend?

A good question indeed and my answer to this is simple.

Read, Read and then Read some more.

The more knowledge you consume, the better you will be able to identify and link trends across industries.

But reading doesn't mean you need to pick a newspaper or start reading random articles over the internet.

Your reading and research needs to be structured.

This is where technology comes in to help and make our lives easier.

Today, algorithms run our world and decide what data you consume.

Be it Instagram posts, TikTok reels or YouTube videos.

So learn to trick these algorithms and use them to your advantage.

Perspective.

Prof. Damodaran is the OG.

Here is a playlist of his valuation class he teaches at NYU Stern.
The same lectures are recorded and uploaded for free for anyone to learn.

https://t.co/fraTT0gUUM

Education and Knowledge is freely available, just need to know how & where to look.

Let's Understand why Narrative is important in investing and how to create a Thesis that can help you to hold a stock in spite of the market environments

Time for a thread with international and Indian examples, Please retweet so that everyone can benefit 🧵🧵🧵🧵

The world we see and defined is given meaning by the words we choose to use. In short, the world is what we make of it. Something similar applies to creating a thesis before investing in a stock. Your thesis is what makes you hold a stock thick and through in spite of bull/bear

Example 1: Amazon- In May 1997, Amazon became a publically listed business. The target price set by analysts was $18 per share. It finished its first day at $23 per share. (So much for targets). In 1999, in the middle of the tech bubble. Same stock was trading at $100 per share.

Analysts were giving targets of $300 per share. However, after the collapse of the bubble many internet businesses went bust, but Amazon survived in spite of a 78% drop from 1999 highs. As we all know, Price changes perception. Same analysts started claiming it was massively

overpriced and claimed its days were "numbered". By the end of 2002, it was trading at 90times cash flow (so much for multiples to account for future)

Name a listed company that has created wealth but its story is not well known or not well documented.

Just curious.

Pharma learnings 101:

Higher the difficulty to manufacture, Lower the competition, Higher the pricing power.

Higher the regulatory oversight, the Bigger is the moat for those who comply.

#PharmawithJST