Key Criteria for Investing: Simple, Predictable, Free Cash Flow Generating Business

The most important factor in investment is high business quality, focusing on simple, predictable, free cash flow generating business. This ensures the ability to predict cash flows over years, especially crucial in a low-interest rate environment. Complexity can hinder cash flow predictability, making it vital to prioritize simplicity, durability, and predictability in businesses. An example is Starbucks, which met investment criteria due to its understandable, durable, and high-returning business model based on consumer habit and predictability of thousands of store economics.