When I talk to people or read blogs and forums, I see people doing so much investigation into companies that I felt like asking the question how much is too much?
I see people trying to apply principles of Soros and Buffet. Every other investor is talking about behavioral economics. Reading annual reports to the every last detail. Attending conference calls.
I feel 80-20 rules applies well while researching companies.
One can find 80% of things needed to rate a company by considering 20% of parameters. After that it is a law of diminishing returns.
I would simplify things even more to just two points. Answers to these two points will give you 80% information about the health of the company and what can be expected from it in future.
* Is the company making money (profits), organically without raising debt or diluting equity
* Is the company making more money (growth) with increased efficiency (margin growth), organically without raising debt or diluting equity.
I would love to know what people of this group think about this subject.
I see people trying to apply principles of Soros and Buffet. Every other investor is talking about behavioral economics. Reading annual reports to the every last detail. Attending conference calls.
I feel 80-20 rules applies well while researching companies.
One can find 80% of things needed to rate a company by considering 20% of parameters. After that it is a law of diminishing returns.
I would simplify things even more to just two points. Answers to these two points will give you 80% information about the health of the company and what can be expected from it in future.
* Is the company making money (profits), organically without raising debt or diluting equity
* Is the company making more money (growth) with increased efficiency (margin growth), organically without raising debt or diluting equity.
I would love to know what people of this group think about this subject.