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RWH044: How To Beat The Market w/ Bryan Lawrence
We Study Billionaires - The Investor’s Podcast Network
Questions for Analyzing a company
To effectively analyze a company, consider six pivotal questions. First, determine if the business is of high quality and if it operates in a natural monopoly or is dominated by rational competitors. Second, evaluate the company's pricing power and whether it is a low-cost operator against its competitors. Third, assess whether the business aligns with your understanding of good operational practices and if it is managed by a team that behaves like shareholders. Fourth, analyze the valuation of the company compared to its expected cash flows and gauge if it offers an attractive internal rate of return. Fifth, identify the reasons for any perceived undervaluation and ensure your viewpoint offers a variant perception compared to the market's judgement. Lastly, critically consider the potential loss if the investment does not perform as anticipated, acknowledging the likelihood of being incorrect at least 30% of the time. This thorough approach aims to cultivate informed investment decisions.
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