BC ECONOMY
Saved by @Jacobtldr

Interpretation of Financial Statements - preliminary filters.

1. Looking for sustainable competitive advantage:

When looking for sustainable moat, you wanna see consistency - in earnings, in having low debt, in having growing earnings, low spending in capital expenditures, etc.

 The longer the company has existed, and if it sells you the same product for years (like Coca Cola), it reduces production costs and other costs (R&D, Training, marketing) slowly as the company ages.

When costs are reduced, margins and profits increase.
2. What to look for in an income statement:

Let's take a look at Apple:

i) You want to see earnings grow at a steady pace. Take a look at the net income below.
ii) Another thing that's important is a consistent and high gross margin.

As a thumb rule, Warren Buffett wants to see a gross margin of around 40% or above.

Although not quite 40%, it's around that range with respect to Apple.
Compare this to Apple's competitors.

Samsung's gross margins are around similar range, highest being 45.7% in 2018, and Huawei had a gross margin of 38.6%.
Having a high gross margin indicates the scalability of the business. The more the company sells, the greater the profitability becomes. Such a trait is what you want to see in a business you want to own.
iii) You also want to note the net margin.

Gross margin = (revenue - cost of goods sold) / revenue

Net margin = net income / revenue.

You want to see the company having higher net margin compared to their competitors.
Apple's net margin is around 22%. Samsung's net margin is around 18% and Huawei's net margin is around 8.5%.

Typically, net margin above 20% is a very strong one, indicating that we are dealing with a smoothly run business.
3) In the balance sheet:

Look at the figure - "Retained Earnings".

Using retained earnings, you can find out if a company is reinvesting its income or not. A steady growth in this number means the business is profitable, and that it's identifying good investing opportunities.
Apple doesn't fulfill the criteria regarding retained earnings. But that's because in 2013, Apple started a rigorous dividends and share repurchase program.

To measure how efficiently a company is using these retained earnings, Return on Equity (ROE) is used.
To calculate ROE, compare Net income to the Total Equity of the company.

Apple looks quite strong in this aspect. It's partly an effect of distributing a lot of their earnings to shareholders. It also signifies the sustainable competitive moat.
Compare this with Samsung (ROE:18.3%) and Huawei (ROE:25.3%), Apple shows significant strength.

4) Exceptional businesses seldom require a lot of debt to expand (except maybe banks/NBFCs). Instead, they can just use the strong cashflow from the business.
So, look for businesses with little to no long term debt. If a company can pay off with all its long term debt with less than 4 years of earnings, it signifies a good position for the company. Apple fulfills this criterion. Samsung and Huawei do too.
5) In a cashflow statement:

This is where you see the actual in's and out's of money.

Look at "Capital Expenditures" on the cashflow statement.

This is the money being spent on properties, plant, and equipment.
Look at what percentage of net income the capital expenditures are. You want it to be as low as possible, lower than 25% over a period of time is considered very good. Less than 50% is okay-ish.

Exceptions: One time payment to grow the business in some capex activity.
Look at Apple's CAPEX spendings. Compare that with their net income, and you can see that their average capex spending is less than 25% of their net income. Samsung (around 65%) and Huawei (around 45%) aren't even close.
Also, in Apple's cash flow statement, we can see the reasons why the retained earnings from the balance sheet haven't been growing from 2012. Apple has been distributing a lot of cash to its shareholders.
Apple's Augmented Payout Ratio (includes share buybacks and dividends) has been higher than 100% in some years. This basically means Apple's distributing more money than it earns.
5) When to sell?

3 instances when you could consider selling the stock.

i) You need money for a better investments. This is more so applicable in a bear market, for you to switch from something great to something exceptional.
ii) When a company loses its competitive advantage. Times change, and once monopolistic companies are constantly being disrupted. If your investment faces such a risk, cut it loose.
iii) During crazy raging bull market. Even if a company runs a fantastic business, it could be a bad investment if you have to pay insane price. At such times, at such price, you could selling a fantastic business if you already have held onto it for a long time.
At a PE of 40 or higher, you should start considering selling your stocks, even if you believe in the underlying economics of the company.

This may not always apply to all markets, all stocks. But with anything above 40PE, tread carefully and cautiously.
So, key takeaways:

- Competitive advantage and scale
- Consistently high net income, return on equity
- Requires very little debt
- Retained earnings has steady growth
- Capital expenditures should be < 25%
- Sell a company if prices are crazy, or a better opportunity comes up.
The Swedish Investor YT channel has some interesting playlists on financial statements. Check it out. These insights I gathered are from one of his videos.

https://t.co/nbKA5Bzpi6
For learning Valuation, nothing better than Aswath Damodaran's course. Find his courses here:

https://t.co/MbmUKsE968

More from Shravan Venkataraman 🎡

Shravan Venkataraman \U0001f525\U0001f680\U0001f4b0
Shravan Venkataraman 🔥...
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Do you keep your gold assets in bank locker? You are probably paying some fees every year for your lockers.

Instead, what if you could get a locker for free?

What if I said banks would pay you to keep your gold assets safe?

Time for a thread. 👇👇👇


1/ The major issue with having gold in bank lockers is

- You pay hefty fees on an annual basis to the bank.
- The lockers aren't insured
- There's no real safety/security in case of theft or an unfortunate event.

Is there a work around?

Yes.

Enter "Gold Monetisation Scheme".

2/ GOI introduced the Gold Monetisation Scheme in 2015. The main objective was to cut down India's gold imports.

How it works:

You deposit your gold in bank.
They keep it safe for a fixed number of years.
You get it back as physical gold or cash on maturity.

3/ What should you do to be eligible?

You should take the gold you want to deposit to a Collection and Purity Testing Centre (CPTC). GOI has established over 300 CPTC's across India.

They will take your gold, evaluate its purity, and provide a receipt for the gold quantity.

4/ You take the receipt to your bank.

Create a gold monetisation scheme account in your bank.

Give them the receipt provided by PTC.

Your bank will then convert that receipt to a scheme certificate as part of your GMS account.
FINANCE
Shravan Venkataraman \U0001f525\U0001f680\U0001f4b0
Shravan Venkataraman 🔥...
@theBuoyantMan
In 2011, a blackjack player made $20 million over 4 months,

and ended up bringing some of the topmost casinos to their knees.

Here's the crazy story of how he pulled it off.

🧵

Don Johnson grew up taking care of his uncle’s racehorses in Salem, Oregon.

After taking interest in them, he began riding them competitively at age 15.

He then became a professional jockey.

As a jockey, he had to stay on a strict routine and take medications to keep his natural weight off and remain slim.

Eventually he couldn't keep up the routine.

So, he quit the job, and went to Philadelphia to manage racetracks.

Johnson was hired to manage the Philadelphia Park.

That race track evolved into the Parx Casino, in Bensalem.

Johnson was in charge of day-to-day operations, including the betting operation.

That's where he started learning about gambling.

Between 1990 and 2010, Johnson’s career has moved from managing racetracks to being a state regulator in the gambling industry.

Around 2000, he started a business that does computer-assisted wagering on horses.
LIFE STORIES
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Shravan Venkataraman \U0001f525\U0001f680\U0001f4b0
Shravan Venkataraman 🔥...
@theBuoyantMan
50 rookie mistakes to avoid as a stock market beginner - a thread.

1. Watching CNBC and acting on the recommendations provided by the "analysts", "experts" and "fund managers" who appear on TV.

Remember, most of them don't even beat the benchmark index on an annual basis.

2. Giving too much importance to Moneycontrol articles and recommendations. Moneycontrol profits off of noobs. They depend on you to make their money. They get paid by buy side firms who want to dump their positions, and sell side firms whose clients want to sell.

They also get paid to propagate rumours (albeit subtly) about stocks that the buy-side firms want to buy (albeit at lower prices) and sell-side firm clients want to buy. So, if you see a recommendation on moneycontrol, that marks the distribution phase (most of the times).

3. Listening to colleagues, friends, and family on what to invest on, where to invest, what stocks to buy. Usually these are also people who have no real expertise, but started a year or few months ahead of you. They only talk about their winners, you get very excited.

4. Listening to social media "experts". People on Twitter, Youtube, etc., even if they look like they are trading crores, or managing hundreds of crores, have different reasons for trading/investing in something. Typically, following them is the path to the butcher's shop.
TRADING
Shravan Venkataraman \U0001f525\U0001f680\U0001f4b0
Shravan Venkataraman 🔥...
@theBuoyantMan
When you break down the lives of extremely successful people, you find that their success didn't come from an earth shattering break-through.

Rather, it came from obsessing about a simple idea, fanatically.

Time for a thread about one such idea. 👇👇👇

1/ During world war II, a eleven year old kid checks out a book from the nearest library. The book's title was "1000 ways to make 1000 dollars".

After he reads that book, he makes a statement that by the time he was 35 years old, he'd be a millionaire.


2/ By the age of 35, his net worth was roughly 7-8 million dollars. The library was Omaha public library. That kid was Warren Buffett.

How he got there is an interesting story.

As soon as he reads that book, he decides he should have 1000 dollars before he finishes school.


3/ While looking for business ideas, he goes to his friend Dan's house one day.

He watches Dan fix an old pinball machine (that he bought for $15) in two hours.

Warren asks him if he can fix more.

Dan says yes.

4/ Warren and Dan set up a company (of course no incorporation and all that legal jazz).

They call the firm "Wilson Coin Operated Company".

They go to local barbers and pitch the barbers an ingenious business plan.
CULTURE
Shravan Venkataraman \U0001f525\U0001f680\U0001f4b0
Shravan Venkataraman 🔥...
@theBuoyantMan
** MEGA THREAD ON Cryptocurrencies/Blockchain**

I wanted to know the best resources to learn about cryptocurrencies and blockchain for someone with zero knowledge. I asked Twitter, and Twitter answered.

This thread is a compilation of the best resources I was recommended. 👇👇

Let's start with ** BOOKS **

The first thing you should do before you pick up any book:

Learn about Bitcoin & Ethereum by reading the respective whitepapers.

- [Bitcoin white paper](https://t.co/cErOaFn6QL) by Satoshi Nakamoto

- [Ethereum White paper] (https://t.co/0g5kYCGJGq) by Vitalik Buterin

Even if you are not tech savvy, you can get a good grasp about how blockchain functions from these papers.

1) *The Basics of Bitcoins and Blockchains: An Introduction to Cryptocurrencies and the Technology that Powers Them* by Antony Lewis

This book covers topics such as the history of Bitcoin, the Bitcoin blockchain, and Bitcoin buying, selling, and mining.

It also answers how payments are made and how transactions are kept secure.

Other cryptocurrencies and cryptocurrency pricing are examined, answering how one puts a value on cryptocurrencies and digital tokens.
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Jawwad Farid
Jawwad Farid
@rebootdude
1/ Unit economic for founders thread.

Despite being a founder and a student of the subject, I missed out on a key point growing up.

Length of relationship with your customers, order frequency, product usage and utility matter.

They didn't teach me this in business school.

2/ Structured right, products used daily vs weekly vs monthly vs yearly lead to different profitability and scalability paths.

Quiz. Which business would you pick?

a) Enterprise software - US$ 250k one time license
b) Enterprise software - US$ 30k/month recurring subscription

3/ Sound's obvious? Which one did you pick?

Twice in my life I picked A. They were both great businesses, but they didn't compare to B. Especially in the long run.

Looking back, with hindsight, I know I should have picked B.

Why?

4/ Bringing in customers is hard.

When those customers leave after a few orders, your investment in that relationship is written off.

But it is not just about the relationship or investment. It is also about scale.

What are the easiest ways to scale a business?

5/ Think about it?

a) Get more customers - acquire
b) Get existing customers to order again - retain
c) Increase order size - up sell
d) Increase order frequency - cross sell / new use case
e) Get existing customers to get you new customers - referral

(b) to (e) are free.
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\uc2e0\ub150\uc758\uc0ac\ub098\uc774
신념의사나이...
@Belposto_korea
Little history of QFS

Let’s put all this Woo Woo stuff aside and find out what the QFS has been doing over the last two years or so. It has been very busy.

Those involved in using this computer have learned how to “connect” into the archaic Central Bank computer(s) system. Through the SWIFT transfer protocol used by the Central Banks (CB),/2

the QFS has obtained account information from every Tier 1 bank account in every bank in the world that is linked to the SWIFT transfer system./3

It has also obtained info for 2nd tier and 3rd tier banks that don’t have their own SWIFT transfer codes and use Tier 1 banks to service their customer’s transfer requests. Tier 2 &3 banks have accounts in Tier 1 banks that are used to transfer money./4

With this information, the QFS was integrated into the SWIFT transfer system and programmed it to where each transfer is channeled through the QFS to record transfer data. The data is then inserted back into the SWIFT system to complete the transfer to the intended bank account.5
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Richard Murphy
Richard Murphy
@RichardJMurphy
As some will have noted, there were a lot of reports yesterday on the fact that £50 billion of banks notes are missing in the UK economy. This got me thinking. And as a result I have to suggest that finding that £50 billion of cash would not be hard. Here’s how to do it.

As the Public Accounts Committee of the House of Commons has noted, around £50 billion of banknotes in issue have no explained use. In other words, they do not appear to be used for regular cash transactions. What their alternative use might be is not known.

Some could be in the possession of tourists, who have not bothered to exchange them on leaving the country. But the amounts involved would be small.

A bigger sum might be cash savings under the proverbial mattress. This is entirely plausible. It is possible that some of this will be related to benefit fraud: the amount of savings a person has can have a significant impact on their ability to claim a number of benefits.

There is no doubt that a significant part of this money Is used within the shadow economy. That can cover activity where tax is evaded, of course. But it also includes drug dealing and many forms of human trafficking and abuse.
ECONOMY
Nick Hanauer
Nick Hanauer
@NickHanauer
Long rant: So earlier today, I got into a spat over the $15 minimum wage with @JamesSurowiecki and @noamscheiber. Because this disagreement over whether there is a mechanical relationship between raising wages and less jobs is incredibly consequential, I wanted to say more.
ECONOMY
Michael Kao
Michael Kao
@UrbanKaoboy
Re: Fannie/Freddie-The Path Is Actually Clearer NOW. On its face, this claim may sound ludicrous off the back of a precipitous drop in valuations due to what some interpret as SM losing his nerve and punting to a hostile Admin. In this thread, I posit the exact opposite.

First, the economic realities: 1) GSEs are the bedrock behind our housing market which in turn is the bedrock behind our economy, 2) after 12 years and $300 bn, gov has thus far squandered the opportunity to recap, 3) this economy recovery is VERY long in the tooth.

When Trump took office, we all hoped that he would usher in a regime change from the Admins that enacted conservatorship and then the Net Worth Sweep. Well, he actually did that with the appointments of SM and MC.

Yet, what always bothered me about SM was his perfect poker-face. For those of you following me for awhile, you know I’ve been saying that I couldn’t tell whether he was just playing bad cop or really was Darth Vader incarnate.

The primary consensus exit preconditions were: 1) there has to be a demonstrable path to meeting cap reqs, 2) the SPS needs to be forgiven, 3) court cases need to be settled.
TRADING , ECONOMY

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#temples

Temple is known as Sabarimala of Women

Thiruvairanikulam Mahadeva Temple is situated on the banks of the Periyar River. Siva Temple has a separate sannidhi for Parvathi Devi which will be open only for 12 days a year


The Nadathurappu Mahothsavam happens every year on Malayalam month of Dhanu. On opening day, a grand procession starting from Akavoor Mana carries the ornaments of Devi to the temple. Swayamvara Archana is the main pooja here to clear the obstacle in marriages.
Legend is that 👇


Vigraham existed in another place called Iranikulam. A Namboodiri of Sreemoolanagaram used to visit the Iranikulam temple regularly. Akavoor Chathan, a boatman will take him to the Iranikulam temple and back. Because of Bhakthi of Namboodiri, Shiva traveled with him to his place.


Akavoor Chathan identified Siva chaitanyam and their family built a temple here. Parvati devi herself will cook Nevidyam here for Shiva, which was witnessed by a priest. Devi was angry at this and decided to leave the place. But when the priest offered his sincere apology👇


Devi blessed him and told that she will be present here 12 days in a year. Thus the period which begins from Thiruvathirai Day in Dhanu is known as the Nadathurappu festival.
Temple Nada opens today night.
Picture credit: Google.
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Billy Bostickson 🏴👁&👁 ...
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Risks of bat-borne zoonotic diseases in Western Asia

Duration: 24/10/2018-23 /10/2019

Funding: $71,500
@dgaytandzhieva
https://t.co/680CdD8uug


2. Bat Virus Database
Access to the database is limited only to those scientists participating in our ‘Bats and Coronaviruses’ project
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One Health research project focused on characterizing bat diversity, bat coronavirus diversity and the risk of bat-borne zoonotic disease emergence in the region.
https://t.co/u6aUeWBGEN


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