| What is the difference between short term trading and long term investing? | Short term trading is all about probability and long term trading is about certainty |
| How do we get certainty in long term investing? | by understanding the company we want to buy very well |
| How do we understand a company very well? | Through intensive and details RESEARCH |
| How does Rulers Hedge our long term investment (2 points)? | 1) Research
2) Patience |
| What do we mean by "Meaning" (2 points)? | 1) Know what you are buying
2) You have to understand the industry and the business |
| What do we mean by "Moat"? | The company must have a DCA - Durable Competitive Advantage |
| What do we mean by "Management" (3 points)? | The CEO must be:
1) Passionate (have a BHAG)
2) Honest
3) Shareholder Orientated |
| What do we mean by "Margin of Safety"? | Buying a business cheap enough so that we can make mistakes and still not lose money |
| How many Maot there is? | 5 & 1/2 |
| What are the 5 1/2 Moats | Brand, Secrets, Toll Bridge, Switching Moat & Networking (1/2) |
| What is an important things to do when a company get several Moats? | To prioritize them by their strength |
| If the Moat numbers are yellow or red in the tool box, what does it mean? | The company could be "under attack" or with a diminishing moat |
| What are the things a Brand Moat include (name minimum 6)? | 1) Name
2) Logo
3) Image
4) Culture
5) Products
6) Process |
| What is the thing a Price Moat have? | The company can source the product cheaper (not sell cheaper) |
| What are the things that Secret Maot include (name minimum 3)? | 1) Patent
2) Processes
3) Copyright |
| What should we be careful with regarding Secret Moat? | The durability / Expiration of their Patent / Secret |
| Why some company (like coke) do not patent their product? | Because once the patent expires, the content of the patent is release (also fear of leak) |
| What are the things that Toll Bridge Moat include (name minimum 3)? | 1) Quasi-Monopolistic (Golden Gate Bridge or a utility companies gas...++)
2) No Competition
3) Highly regulated |
| What is the thing Switch Moat include? | Once in place, it is difficult to replace both financially and operationally (Salesforce, Verizon, Oracle...) |
| What is often happening with the Switch Moat? | It is not often promoted as a selling point so it is difficult to replace that product (accounting system or HR product in a company for example) |
| Warren Buffet says, the key to investing is NOT how much an industry will grow or how it will affect the society. So what it is then (2 points) ? | 1) It is determining the competitive advantage of any given company
2) Define the durability of that advantage |
| What would be a good question for the Moat in one sentence? | What problem will customer face, if the company disappears? (would it be a problem if the company disappears tomorrow? |
| Where is the first place to look for moat information? | 10K - Business General and COMPARE INFO WITH RETAIL website |
| What are recurring sales (always good for Moat)? | When you buy a product often (coke, starbucks....) |
| Ideally, what gross profit margin are we looking at in %? | 40% gross profit margin (depends on the industry. could be higher or lower) |
| How to calculate Gross Profit Margin and where to find the numbers? | 1) Gross Profit / Revenue
2) Find the numbers in the income statement |
| What do to with the Gross Profit Margin of my company (when I have the information)? | Compare my company with the leaders (market cap leaders) and see where we stand compare to their Gross Profit Margin |
| What are the 4 numbers we look at to see if the moat is strong and where to find them? | 1) Book Value Per Share + Dividends Growth rate from the Balance Sheet
2) EPS from the Income Statement
3) Operating cash flow per share from them Cash flow Statement
4) Sales from the Income Statement |
| What is the difference between the management numbers and Moat numbers? | Moat numbers are looking at GROWTH and Management numbers are looking at RETURN |
| Why knowing your competition is important? | You must know who you are competing with & compare (do small chart) with your competitors based on Tool box 4 numbers |
| Good Moat Question? | Would we sleep well at night if you invested all of our money in the one company and couldn't touch it for 10 years ? |
