Excellent article on Investor psychology & Market cycles based on Howard Marks' "Mastering the Market Cycle".

cc: @dmuthuk @Gautam__Baid

One of the best Investing blogs I recently came across. h/t @StableBread 👏

Five of my fav articles⬇️

@dmuthuk @saxena_puru @Gautam__Baid

1⃣On Moats
Network Effect
Intangible Assets
Switching Cost
Economies of Scale
Low Cost Provider
Toll
Cultural

2⃣Crucial Investment Principles You Need to Have
Capital Appreciation
Buy Low, Hold, Sell High
Recognize/Avoid Spec Bubbles
Ignore Noise
Stock Market=Pendulum
Diversify Your investments. Don't overdo it.
DCA
Understand Share Price Value
LT Tax

3⃣How to Read and Analyze Any 10-K Annual Report

Business Summary
Risk Factors
Selected Financial Data
Management's Discussion and Analysis
Financial Statements and Supplementary Data
Notes to Consolidated Financial

4⃣The Beginner's Guide to Dividend Investing

Dividend Yield
Dividend Growth Rate
Dividend Payout Ratio
Ability to Pay Back Debt
Net Debt to EBITDA Ratio
Return on Equity
Credit

5⃣How to Calculate the Intrinsic Value of a Company Like Warren Buffett

Owners Earnings
Growth Rate
Discount Rate
Calculate Intrinsic Value
Scenario Analysis
Margin of

"4 Simple Rules To Protect Your Portfolio From Yourself" h/t @EconomyApp 👏👏

Excellent article for the current environment (with big drawdowns in many high growth including some quality Co.'s)

My fav parts from the article in the thread below.

"The real threat to your portfolio is not volatility. It's your ability to cope with it. As a result, your portfolio doesn't need to be protected from volatility. It needs to be protected from yourself." 👏

"Volatility refers to how dramatically the price of an investment may change. On the other hand, risk refers to the probability that an investment will underperform the market or result in a permanent loss of capital."

"In short, a stock that sees very large swings in its price over time may be a less risky investment than one that barely moves. The true risk over a long timeframe depends on the underlying business more than the sheer volatility of its share price."

"How much volatility can I tolerate?"

That's the key question that we all need to answer, but it might be the wrong way to tackle the question of temperament.

Good Investing Checklist that goes thru Basics, Financials, Valuation & Behavioral factors. h/t Nicole Seah (not sure if it's @startingfromnix)

1.The Story
Do I understand the business?
Do I believe in the mission?
Moat?
How well do I trust Mgmt?
Do I know the key risks?
Do I have an idea why the company is trading at a discount to its intrinsic value?
What are the potential catalysts?
Is there room for future growth?

2. Financial Metrics
Financial statements and footnotes
Cyclical, countercyclical?
Inflation impact
Operating Leverage
Assessing Working Capital + Capex
Trends in Revenues, Margins, Cash flows...
Recent investments, acquisitions?

3.Valuation
Relative Valuation
DCF

Good pts on few of the behavioral biases to watch out for 👇

BEST VALUATION FACTOR

Price to earning below:10

Price to book below:2

5 years ROE:more than 20%

If you follow these points then you won’t overpay & your return would be bigger than anyone

it’s very tough to get any stock now but there were lots of stock last year
#investing

Saturday thoughts on market pull. What is it? How is it different from Total Addressable Market (TAM)? And what ideas tend to have strong market pull?

A thread >>

1) First: "Market pull" != market size.

IMO (and most VCs will disagree!!), market size (TAM) doesn't *really* matter. But market pull DEFINITELY does. For that reason, I've almost never asked a startup about TAM.

Why?

2) First, what is TAM?

TAM is a sizing of how big your market is. A good way to estimate this is - if you can get to all potential buyers and based on how much $$ they are worth to you, how much money can your company make if you took the whole mkt?

3) An example: Say we run an e-commerce site that sells hippo food. TAM in the world:

-1000 zoos have on average 3 hippos = 3000 hippos.
-Each hippo eats $100 worth of food each day
-365 days * $100 * 3000 hippos = $110m per year globally

4) But, we'll come back to this.

Why I don't like TAM - it doesn't take into acct a few things:

A) how hard it is to get customers
B) how much more you can upsell once you have customers
C) how fast the mkt is moving up or down

Market PE at 40 and yet the market is not falling, why? Getting asked this question multiple times. Here's a thread covering ‘very basic’ premier on valuation for my retail investor friends.

Do hit the ‘re-tweet’ and help us educate more investors (1/n)

For us to be able to comprehend the situation, we need to understand 4 very basic valuation matrixes
(1) Trailing EPS
(2) Forward EPS
(3) Trailing PE
(4) Forward PE

Formula

EPS = Profit After Tax / Number of outstanding Shares
PE = Market Price / EPS (2/n)

So what's a trailing EPS?

So in March 2020, RIL generated a Profit after tax (PAT) of 39,354 cr. The number of outstanding shares of RIL is some 676.21 cr. which means the 39,354 cr of PAT belongs to the 676.21 cr. shareholders, right? (3/n)

That also means that per share, RIL earned Rs. 58.20 (39,354/676.21). This 58.20 is called the trailing (TTM) EPS. Trailing means past, already done. (4/n)

So RIL earns 58.20 rupees per share but you pay 58.20 * 33.16 = 1930, 33.16 times more to buy 1 share from the market, that 33.16 is called the Price/Earnings (PE) ratio. This is again trailing as 58.20 EPS is trailing. (5/n)

1/ The SPAC I’ve been tracking is $SAII, merging with Otonomo.

It’s a marketplace that enables auto manufacturers to monetize their connected car data that it aggregates and standardizes using its data platform. It projects revenue to grow from $3M in 2021 to $574M by 2025.

2/ Platform:

Otonomo is standardizing data using its patent-pending technology from its 16 OEM partners including Ford, GM, and BMW who provide data on 40M connected cars (4.3B data points daily), to make it easily usable by consumers and developers who can access it via API.

3/ Similar to other aggregators like $ROKU or $TTD, one of their biggest advantages is their neutrality. Many mobility services can’t operate well without data from multiple OEMs but individual OEMs lack the incentive to share their data with competitors.

4/ Otonomo is collecting over 150 data parameters per vehicle such as engine status, temperature, speed, location, fuel or battery levels, or seatbelt status. This is then normalized across OEMs and car models, anonymized, cleansed, and enriched through AI/ML.

5/ There are hundreds of use cases that range from helping drivers to find parking to helping rental companies monitor their fleets in real-time or insurance companies offer usage-based insurance and better claims processing. Otonomo charges usage-based fees based on use-case.

Some Excellent articles on Financial Ratios and Analysis.
h/t @discover_ci 👏

1⃣ Profitability

2⃣Liquidity

3⃣Leverage

4⃣Asset Management

5⃣Financial Analysis: What It Is and Tips for Getting it Right.

✔️Determining a Company’s Key Performance Indicators
✔️Collecting Company Financial Statements & Calculating Financial Ratios
✔️Analyzing Operating Results & Financial