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LEVERAGE
- Leverage at the country, corporate and individual
level
- Leverage is a great ROE enhancer, if sustainable
"Leverage is an incredibly powerful tool, but it's not something you can use blindly.
You have to be careful." - Charlie Munger
DIRECTION
- Headwinds or Tailwinds
- Disruptor or Getting Disrupted
- Emerging or Receding
"In the business world, the rear-view mirror is always clearer than the windshield." - Warren Buffett.
REASONABLE VALUATION
- A great business may not be great stock if its
valuation is too high
"No matter how wonderful a business is, it's not worth an infinite price." - Charlie
Munger
INTEGRITY - WISDOM - PASSION
- Treatment with minority shareholders
- Culture of Ethics, Governance and Compliance
- Actions reflect words
- Experience, education and motivation for the
business
- Behaviour during difficult times
- Lives and breathes the business
"When we own portions of outstanding businesses with outstanding managements, our favorite holding
period is forever." - Warren Buffett.
CASH FLOW
- Reflects quality of business
- Cash flow generation and allocation
- Tools for identifying risk and fraud
"Revenue is vanity, profit is sanity, cash flow is reality" - Anonymous
EARNINGS
- Sustainability
- Growth
- Cyclicality
"The most important thing is to understand the cycles and know that earnings growth
is the result of an economy or business cycle." - Ray Dalio
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