Are You Making These Investing Mistakes

One of the ways that you can build wealth, and live a little more abundantly is to invest. Investing can provide a way for you to put your money to work on your behalf. While there are risks involved in investing, and the possibility of loss, you can reduce some of that chance of loss by avoiding some of the more common investing mistakes.

As you consider investing, and how to build a portfolio that works for your situation, here are some common mistakes to avoid:

1.  Panicking with the Crowd

It’s easy to get scared and panic — especially when everyone else is doing it. However, you need to be careful about when you sell investments. While there are some very good reasons to sell a stock, it’s rarely a good idea to sell a stock just because everyone is in panic mode.

Instead, take a step back and look at the big picture. Are assets losing ground because the whole market is tanking? If so, you might not want to pull the trigger too quickly. Instead, consider the fundamentals. If the fundamentals are still solid, there is a good chance that your assets will recover in time.

2.  Trading Too Often

This can be tied with panicking, but it can also be its own problem. Too many of us get caught up in to day to day movements, and think that we need to trade a lot. While there are day traders who manage to make good money on regular market movements, it’s important to realize that these traders are dedicated to what they do.

Most of us regular folks are better off trading at wider intervals, or employing a dollar cost averaging strategy. Trading too often can cost you in terms of transaction fees, and there is a bigger chance that you will lose out.

3.  Lack of Diversity

If you want to reduce the overall risk of your portfolio, you need to remember to diversify to some degree. You need to make sure that your investments are diversified in terms of asset class, as well as across different sectors and industries. It also doesn’t hurt to diversify geographically and include investments from other countries. Avoid investing heavily in your company’s stock.

It’s fairly easy to start investing, and to diversify. There are index funds and ETFs that allow you to diversify easily, while at the same time helping you avoid some of the bigger risks that can come with investing.

4.  Failure to Understand What You're Investing In.

One of the reasons it’s good to start with stocks and bonds, and investments that are based on them (like index funds and ETFs), is because they are fairly easy to understand. You shouldn’t invest in things that you don’t understand. Take a few minutes to learn how different asset classes are traded, and how different investments work. It is also worth to learn what factors influence different investments. Get a handle on how different investments work, and you will be far more likely to find success and avoid some of the pitfalls that bring down investors.

Read More

Organizing Your Investing Bucket

With the Easter bunny relaxing after a busy holiday, kids from all over are given the task of organizing the candy and money collected during their hunts. Investors are also constantly reminded that their portfolio eggs should not be solely placed in one basket either. Instead, investors are told to diversify their investments across a whole host of asset classes, geographies, styles, and sizes. In other words, this means investors should be spreading their money across commodity, real estate, international, emerging market, value, growth, small-cap, and large-cap investments. As Jason Zweig, journalist from a the Wall Street Journal points out, much of the diversification benefits can be achieved with relatively small change in the position count of a portfolio:

“As many studies have shown, at least 40% of the variability in returns can be reduced by moving from a single company to 20. Once a portfolio contains 20 or 30 stocks, adding more does little to damp the fluctuations in wealth over time.”

 But wait. Going from one banking stock to 20 banking stocks is not going to provide you with the proper diversification you want or need. Rather, what is as important as investing across asset class, geography, style, and size, is to follow the individual stock strategies of guru Peter Lynch. In order to put his performance into perspective, Lynch’s Fidelity Magellan fund averaged +29% per year from 1977 – 1990 – almost doubling the return of the S&P 500 index for that period.

More specifically, to achieve these heroic returns, Lynch divided the stocks in his fund into the following categories:

Slow Growers: This group of stocks wasn’t Lynch’s favorite because these companies typically operate in mature industries with limited expansion opportunities. For these single-digit EPS growers, Lynch focused more on identifying high dividend-paying stocks that were trading at attractive valuations. In particular, he paid attention to a dividend-adjusted PEG ratio (Price-to-Earnings Growth). A utility company would be an example of a “Slow Grower.”

Stalwarts: These are large established companies that still have the ability to achieve +10% to +12% annual earnings growth regardless of the economic cycle. Lynch liked these stocks especially during recessions and downturns. Valuations are still very important for Stalwarts, and many of them pay dividends. An investor may not realize a “home run” with respect to returns, but a +30% to 50% return over a few years is not out of the question, if selected correctly. Former examples of “Stalwarts” include Coca Cola (KO) and Procter & Gamble (PG).

Fast Growers: This categorization applies to small aggressive firms averaging about +20% to +25% annual earnings growth. While “Fast Growers” offer the most price appreciation potential, these stocks also offer the most risk, especially once growth/momentum slows. If timed correctly, as Lynch adeptly achieved, these stocks can increase multi-fold in value. The great thing about these “Fast Growers” is they don’t have to reside in fast growth industries. Lynch actually preferred market share gainers in legacy industries.

Cyclicals: These companies tend to see their sales and profits rise and fall with the overall economic cycle. The hyper-sensitivity to economic fluctuations makes the timing on these stocks extremely tricky, leading to losses and tears – especially if you get in too late or get out too late. To emphasize his point, Lynch states, “Cyclicals are like blackjack: stay in the game too long and it’s bound to take all your profit.” The other mistake inexperienced investors make is mistaking a “Cyclical” company as a “Stalwart” at the peak of a cycle. Examples of cyclical industries include airline, auto, steel, travel, and chemical industries.

Turnarounds: Lynch calls these stocks, “No Growers,” and they primarily of consist of situations like bail-outs, spin-offs, and restructurings. Unlike cyclical stocks, “Turnarounds” are usually least sensitive to the overall market. Even though these stocks are beaten down or depressed, they are enormously risky. Chyrysler, during the 1980s, was an example of a favorable Lynch turnaround.

Asset Plays: Overlooked or underappreciated assets such as real estate, oil reserves, patented drugs, and/or cash on the balance sheet are all examples of “Asset Plays” that Lynch would consider. Patience is paramount with these types of investments because it may take considerable time for the market to recognize such concealed assets.

Worth noting is that not all stocks remain in the same Lynch category. Apple Inc. (AAPL) is an example of a “Fast Grower” that has migrated to “Stalwart” or “Slow Grower” status, therefore items such as valuation and capital deployment (dividends and share buyback) become more important.

Peter Lynch’s heroic track record speaks for itself. Traditional diversification methods of spreading your eggs across various asset class baskets is useful, but this approach can be enhanced by identifying worthy candidates across Lynch’s six specific stock categories. Hunting for these winners is something Lynch and the Easter bunny could both agree upon.

Read More

Warren Buffett on "The Key of Investing"

Warren Buffett had this to say in a 1999 Fortune article that was written as the tech bubble was coming to an end:

"The key to investing is not assessing how much an industry is going to affect society, or how much it will grow, but rather determining the competitive advantage of any given company and, above all, the durability of that advantage. The products or services that have wide, sustainable moats around them are the ones that deliver rewards to investors."

In the article, Buffett also points out that many of the most"glamorous" businesses -- many that have changed the world dramatically for the better -- did not ultimately reward their investors.

One often has little to do with the other.

At the time, he was saying that stocks, due to excessive valuations and the high expectations of investors, were likely to disappoint (of course, he supposedly didn't get the "new paradigm"). Yet, Buffett was still optimistic that the businesses themselves would keep increasing in value and that, over time, investors would be "considerably wealthier, simply because the American business establishment that they own will have been chugging along, increasing its profits..."

The intrinsic worth of American business has been increasing since that article was written. Businesses just needed a good chunk of the past decade plus for the per-share value to catch up to the then prevailing premium market prices.

At the time that article was written, Buffett made it clear he wasn't predicting what stock prices might do in the near-term or even longer. Those who have read and listened to him over the years knows Buffett has never really been interested in that sort of thing.

Instead, he was thinking in terms of how price compared to valuation, and likely longer term outcomes, not trying to predict price action. Eventually, value is what counts, but individual marketable securities, and markets more generally, are capable of moving in ways that have little to do with value for very long periods of time.

The intrinsic worth of American business might be increasing over time, but stock prices may not necessarily reflect that until much later.

So while valuations may be less nonsensical these days, it still reveals nothing about what stocks might do over the next several years. Attempting to judge where market prices stand in relation to per-share value is time well spent. Guessing what the price action might be over the next month or even several years is not.

Buffett added this in the most recent Berkshire Hathaway (BRKa) shareholder letter:

"American business will do fine over time. And stocks will do well just as certainly, since their fate is tied to business performance. Periodic setbacks will occur, yes, but investors and managers are in a game that is heavily stacked in their favor. (The Dow Jones Industrials advanced from 66 to 11,497 in the 20th Century, a staggering 17,320% increase that materialized despite four costly wars, a Great Depression and many recessions. And don't forget that shareholders received substantial dividends throughout the century as well.)

Since the basic game is so favorable, Charlie and I believe it's a terrible mistake to try to dance in and out of it based upon the turn of tarot cards, the predictions of 'experts,' or the ebb and flow of business activity. The risks of being out of the game are huge compared to the risks of being in it."

It's understandable, even if not particularly enriching, that investors and other market participants weigh the risk of loss versus the possibility of gains asymmetrically.

Loss aversion is a very powerful thing.*

Having said that, those who think they can "dance in and out"effectively (and many certainly seem to try!) might want to carefully consider the last line in the above excerpt from the letter.

Read More

Benjamin Graham: Timing vs Pricing Stocks

"By timing we mean the endeavor to anticipate the action of the stock market—to buy or hold when the future course is deemed to be upward, to sell or refrain from buying when the course is downward. By pricing we mean the endeavor to buy stocks when they are quoted below their fair value and to sell them when they rise above such value. A less ambitious form of pricing is the simple effort to make sure that when you buy you do not pay too much for your stocks. This may suffice for the defensive investor, whose emphasis is on long-pull holding; but as such it represents an essential minimum of attention to market levels.

We are convinced that the intelligent investor can derive satisfactory results from pricing of either type. We are equally sure that if he places his emphasis on timing, in the sense of forecasting, he will end up as a speculator and with a speculator's* financial results." - Benjamin Graham

Back in 2009, Warren Buffett said the following:

"We don't try to pick bottoms. To sit around and not do something sensible because you think there might be something better…. doesn't make sense. Picking bottoms is not our game. Pricing is our game. And that's not so difficult. Picking bottoms is, I think, impossible." - Warren Buffett

Buffett: Picking bottoms is impossible

Market participants attempting to get the timing right (something that seems more close to futile than not) end up distracted from what's important: Making price versus valuation judgments that, over the long haul, will get the best possible result at the least risk.

Attempts at timing is inherently speculative and a distraction away from the all-important price versus value discipline.

Mispriced assets often seem to get sorted out in nearly, if not completely, unpredictable ways in terms of timing. It's important to be realistic -- when the timing does happen to work out -- about the real reasons why. Successful moves don't always get the scrutiny they deserve.

Sometimes the favorable outcome was more about luck than great foresight.

Sometimes it has little to do with having some unusual talent for predicting the amount and timing of price movements.

Not knowing when a favorable outcome was mostly accidental is a recipe for future mistakes.

An approach dependent on lucky or accidental outcomes is destined to result in even bigger losses down the road if it leads to unwarranted overconfidence. A few successful outcomes resulting more from good fortune, less on real foresight, might encourage that market participant to put even larger amounts of capital at risk (with maybe less favorable outcomes). I'm not saying no one can effectively time these things (even though my interest in such an approach is effectively zero). I'm saying those that try had better have a realistic view of their own abilities.

Overestimation of one's own talent in this regard will likely end up being very expensive.

The good news is a long-term investor doesn't have to get the timing right if sound price versus value judgments are mostly being made. Mistakes are inevitable, of course. The key is keeping them small and infrequent. One way to keep them small and infrequent is to always pay an appropriate discount to a well-judged valuation. An appropriate margin of safety is protection against small misjudgments (since valuation even done well is inherently imprecise) and the unforeseen adverse developments that inevitably arise in an unpredictable world.

Developing competence when it comes to understanding how price relates to the value of an asset is a good use of energy.

Attempts at timing the market generally isn't.

Expect wild fluctuations in price and allow that inevitable dynamic -- Mr. Market's inherent moodiness and -- to serve.

Read More

Aesop's Investment Axiom

According to Warren Buffett, the formula for valuing an asset purchased for gain is the same now as it was when articulated by Aesop long ago.

From the 2000 Berkshire Hathaway (BRKa) shareholder letter:

"...Aesop and his enduring, though somewhat incomplete, investment insight was 'a bird in the hand is worth two in the bush.' To flesh out this principle, you must answer only three questions. How certain are you that there are indeed birds in the bush? When will they emerge and how many will there be? What is the risk-free interest rate (which we consider to be the yield on long-term U.S. bonds)? If you can answer these three questions, you will know the maximum value of the bush -- and the maximum number of the birds you now possess that should be offered for it. And, of course, don't literally think birds. Think dollars.

Aesop's investment axiom, thus expanded and converted into dollars, is immutable. It applies to outlays for farms, oil royalties, bonds, stocks, lottery tickets, and manufacturing plants. And neither the advent of the steam engine, the harnessing of electricity nor the creation of the automobile changed the formula one iota -- nor will the Internet. Just insert the correct numbers, and you can rank the attractiveness of all possible uses of capital throughout the universe. 

Common yardsticks such as dividend yield, the ratio of price to earnings or to book value, and even growth rates have nothing to do with valuation except to the extent they provide clues to the amount and timing of cash flows into and from the business. Indeed, growth can destroy value if it requires cash inputs in the early years of a project or enterprise that exceed the discounted value of the cash that those assets will generate in later years. Market commentators and investment managers who glibly refer to 'growth' and 'value' styles as contrasting approaches to investment are displaying their ignorance, not their sophistication. Growth is simply a component -- usually a plus, sometimes a minus -- in the value equation."

Somehow a distinction between growth investing and value investing is frequently still made.

It's a distinction without a real difference.

Some will no doubt disagree.

Investing well over the long run requires many things, of course. Yet it ultimately depends upon understanding how to judge correctly, within a useful range, what something is worth -- regardless of its growth profile -- then paying an appropriate discount for it.

The necessity for a discount reflects the inherently imprecise nature of judging value. It also reflects the fact that not everything that's important can be known and misjudgments will inevitably be made. Simplistic valuation metrics like price to earnings are only useful if they happen to be a meaningful proxy for the amount of future net cash an investment will likely generate.

Unfortunately, that's often not the case.

More from the letter:

"...Aesop's proposition and the third variable -- that is, interest rates -- are simple, plugging in numbers for the other two variables is a difficult task. Using precise numbers is, in fact, foolish; working with a range of possibilities is the better approach. 

Usually, the range must be so wide that no useful conclusion can be reached. Occasionally, though, even very conservative estimates about the future emergence of birds reveal that the price quoted is startlingly low in relation to value. (Let's call this phenomenon the IBT -- Inefficient Bush Theory.) To be sure, an investor needs some general understanding of business economics as well as the ability to think independently to reach a well-founded positive conclusion. But the investor does not need brilliance nor blinding insights."

How much cash will be generated, when it will generated, and what the prevailing risk-free interest rate is what's all-important. Once there's a meaningful estimate (within a range), the amount and timing of cash flows can then be discounted using an appropriate interest rate.

So it's not, as some might think, growth per se that's necessarily important.

If interest rates are very high, the cash produced in the future needs to be available to the investor sooner than later.

If prevailing rates are very low, the investor can afford to wait quite some time for that cash.

The investment process ultimately rests upon the foundation of knowing how to judge what something is worth consistently well. Lack that ability and everything built upon that foundation crumbles. Others skills and abilities won't be able to compensate for that shortcoming.

Otherwise, it comes down to thinking independently, an even temperament, discipline, and an awareness of limitations. It's less about IQ than some seem to think.

A speculator will, of course, have an entirely different way of looking at this. For a speculator (with a long position, of course), a large drop in the price of an asset is not a good thing. For an investor, a large drop in the value of an asset is not a good thing.

A drop in value means that the net cash to be produced over the life of an asset was misjudged.

A drop in price may mean the psychology of the market has changed (though it surely could also reflect fundamental factors). A temporary drop in price will be a good thing for the investor who's judged value well.

Speculators try to gauge price action. In general, they try to figure out what someone else will be willing to pay in the future.*

That certainly doesn't mean there's something inherently wrong with speculation. There isn't.

It's just that there is a real difference -- in both required skill set and temperament -- between trying to figure out what others will pay for an asset at some later time, and figuring out what an asset itself can produce over its useful life in economic value.

From this interview with Warren Buffett:

"Basically, it's subjective, but in investment attitude you look at the asset itself to produce the return. So if I buy a farm and I expect it to produce $80 an acre for me in terms of its revenue from corn, soybeans etc. and it cost me $600. I'm looking at the return from the farm itself. I'm not looking at the price of the farm every day or every week or every year. On the other hand if I buy a stock and I hope it goes up next week, to me that's pure speculation."

Let's hope we don't always have to go back 2,600 years or so to find investment wisdom.

Read More

Tune Insurance: Where does it swings?

I am amazed with the Malaysian market - at a time when some are afraid of Airasia's growth prospects due to competition from presumable Malindo, we are celebrating the high price valuation of Tune Insurance. (have you heard of Malindo news nowadays - is the March launch still on, BTW?)

Now, let me put this right. Airasia is offering a service which people would like to have - i.e. cheap travel. Tune Insurance which is an exclusive partner to Airasia is offering something which we can do without...travel insurance. Once in a while we may be afraid of the risks associated with flying, but if we are afraid, why fly? A travel insurance will not do much help except enriching the provider. Airasia as in other low costs airlines like Ryanair will push for these kind of services as they are fringe income from the Low-Costs airline business. But, overtime as I see it regulators will want these airlines to be much more upfront - such as the case of Australia summoning Airasia for misleading customers in its pricing.

No doubt I still very much like Airasia as I think it is going to be the leading contender in the low frills airline business in much parts of Asia, I think that Tune Insurance is overpriced. I am reading somewhere that at its current traded price of RM1.35 (market capitalisation of RM1.014 billion), the prospective PE for FY2013 is somewhere along 16x? Is it possible? Lets look at the Proforma Income Statement for the past 4 years. Firstly, lets look at the red block for Operating Revenue. Notice the growth in revenue and if you look at the Audited Report for 2009 to 2011, the travel insurance business has very high profit margin.

Proforma Income Statement for Tune Insurance

How not possible that it is not highly profitable in terms of margin? The marketing is all done by Airasia. A minimal fee and commission is probably paid to Airasia - that's all AND look at the gross claims paid. Nobody is claiming because there is not much you can claim from the coverage terms in the insurance anyway. Additionally, its costs is all in the commission and fees paid. If there's no sales, there's no commission to be paid. In fact, Tune Insurance has no costs literally speaking except for the "gwailo" CEO which it does not need - unless you need the slang when being interviewed by BFM.

That is why as you can see it, once the main business i.e. airline business is becoming successful - Tony and his team are reaping the benefits from this travel insurance business. I do not see how this insurance business is not profitable. It is a LPI (Lonpac) to Public Bank - a hugely successful bank in Malaysia. Lonpac does not do much marketing - Public Bank does most of the marketing. In fact, what's a potential loss to Airasia from its additional source of income from insurance will be a gain to Tune Insurance and can be vice versa, anytime. The CEO's job for the insurance company must be a good one!

Anyway, now that we know it is highly impossible that Tune Insurance will not be a hugely profitable business in terms of margin (unless there is a major plane crash - and even that I think it is covered), what about its growth and other potentials. The travel insurance will grow in tandem with Airasia's in Malaysia - probably slightly better growth due to the high inelasticity in its ability to price - who will notice if Tune is to add another RM1 or two?

But for its other side of business...Mid of last year Tune Insurance bought over a very small general insurance business despite the hugely competitive environment as there were several much bigger and more competitive insurance companies having their M&As over the last few years. That acquisition is what you see in the segmental revenue as below.

Segmental revenue

As you can see above, the revenue from travel insurance is being dwarfed by other general insurance business in 2012. This percentage will get bigger with the full year income being recognised. What about the impact? As much as the travel insurance business is highly profitable, the motor and non-motor insurance is NOT. It is a totally different business for Tune. It is highly competitive, highly regulated and highly not TUNE.

If it is pitching a different tune for the other general (motor and non-motor insurance), then I probably would buy it - something like they are going full-fledged online and selling it cheaper. The pitch as at now however is (not convincing for the price paid for) i.e. the "beautiful" low cost no frills airline (Airasia) and Tune Insurance is to be riding on the strength of that growth while it now has another side of business with 1,000 agents selling for the motor and non-motor general insurance. That does not go past me as P&O is only valued at less than RM400 million. How is Tune supposed to be worth more than RM1 billion.

Why did it acquire that insurance business anyway if it is not attractive in terms of prospects? It is cheap for one - with the money raised from the IPO, it has already covered the acquisition price. Tune needs to be a larger insurance company to survive despite the profits as there are minimal regulations requirements as a insurance company that it needs to meet. Another thing is that with the higher revenue - the income statement looks good. Who will pay for a company with RM1 billion valuation but its revenue is just a meager RM55 million?

Now back to the valuation again. The travel insurance is great but the other general insurance is not. For it to meet the 16x PE for this year as claimed in some newspapers, it all depends on how much can the Tune group swings the profits - and the list of directors in Tune Insurance are very much capable of that. That's why I am not interested.

Read More

Grantham: Investing in a low-growth world

In Jeremy Grantham's latest letter, he asks whether lower GDP growth logically leads to reduced stock returns.

Grantham answers that question this way:

"This is where I break ranks with many pessimists because I believe theory and practice strongly indicate that lower GDP growth does not directly affect stock returns or corporate profitability.

He adds, parenthetically, that their may be some effects of lower GDP growth that will lower equity returns in a minor way. This gets covered in more detail later in the letter. Otherwise, as far as stock returns go, growth is just not as big a factor as some might think.

All corporate growth has to funnel through return on equity. The problem with growth companies and growth countries is that they so often outrun the capital with which to grow and must raise more capital. Investors grow rich not on earnings growth, but on growth in earnings per share. There is almost no evidence that faster-growing countries have higher margins. In fact, it is slightly the reverse."

In fact, growth can be a negative factor. According to Grantham, it turns out that growth companies and countries underperform...

"The fact that growth companies historically have underperformed the market – probably because too much was expected of them and because they were more appealing to clients – was not accepted for decades, but by about the mid-1990s the historical data in favor of 'value' stocks began to overwhelm the earlier logically appealing idea that growth should win out. It was clear that 'value' or low growth stocks had won for the prior 50 years at least. This was unfortunate because the market's faulty intuition had made it very easy for value managers or contrarians to outperform. Ah, the good old days! But now the same faulty intuition applies to fast-growing countries. How appealing an assumption it is that they should beat the slow pokes. But it just ain't so."

While maybe not intuitive, that high growth rates will have a high correlation with investor returns is far from a given.
(Regular readers obviously know that this has been covered more than a few times on this blog.)

High levels of growth should, of course, generally lead to more desirable investment outcomes, right? As it turns out, not necessarily. If interested, here are some of the prior posts that deal with variations of this subject:

Buffett: Stocks, Bonds, and Coupons - January 2013
Maximizing Per-Share Value - October 2012
Death of Equities Greatly Exaggerated - August 2012
Stock Returns & GDP Growth - July 2012
Why Growth May Matter Less Than Investors Think - July 2012
Ben Graham: Better Than Average Expected Growth - March 2012
Buffett: Why Growth Is Not Necessarily A Good Thing - Oct 2011
Grantham: High Growth Doesn't Equal High Returns - Nov 2010
Growth & Investor Returns - June 2010
High Growth Doesn't Equal High Investor Returns - July 2009
The Growth Myth Revisited - July 2009
The Growth Myth - June 2009

Fast-growing countries, industries, and individual businesses have a whole range of possible investor outcomes with above average returns far from being certain.

"Growth is always a component in the calculation of value, constituting a variable whose importance can range from negligible to enormous and whose impact can be negative as well as positive." - Warren Buffett in the 1992 Berkshire Hathaway (BRKa) Shareholder Letter

Wait, growth can be a negative thing?

Some might choose to treat all this as anomaly. Yet, it's often not a bad idea to explore in some depth what's against conventional wisdom -- what's not intuitive. Occasionally, that's where the more useful insights reside. 

Growth, of course, can be a good thing but some seem to think, from an investor point of view, it is always a good thing. What gets in the way? Well, investors often pay too much for attractive future prospects. Also, high growth prospects invite in lots of capital and competition. Lots of well-financed capable competitors can lead to undesirable core economics and a wide range of unpredictable outcomes.*

The real question becomes whether growth will have a favorable impact on the per share value created over a very long time. Sometimes it does. Sometimes it does not. 

The primary drivers of long-term returns is the price that's paid relative to well-judged intrinsic value, return on capital**, and whether real durable advantages exist. 

A good business needs little capital. It can return the excess capital produced to shareholders. It can use it to finance opportunities at an attractive long-term return. It can do these things while maintaining or even increasing the size and strength of its economic moat (has no trouble defending its core business economics). 

This just requires business leaders who do not choose growth for its own sake over per share returns for its shareholders. 

Far from a certainty. 

Unfortunately, sometimes the fastest growing, most promising, dynamic, and exciting areas of opportunity produce less attractive risk-adjusted returns and a wider range of outcomes.

Read More