Reflection.
With the Q3 earnings season nearing the end, and after doing numerous earnings reviews for my portfolio companies.
Here’s 10 of my biggest reflections and key takeaways 👇🏻:
With the Q3 earnings season nearing the end, and after doing numerous earnings reviews for my portfolio companies.
Here’s 10 of my biggest reflections and key takeaways 👇🏻:
1 | Fluctuations.
Not every businesses will do well every quarter.
There will be some quarters that they will do really well.
There will be some quarters, they won’t do so well, consolidating, reinvesting, pivoting.
There will be others indicating a long-term broader decline.
Not every businesses will do well every quarter.
There will be some quarters that they will do really well.
There will be some quarters, they won’t do so well, consolidating, reinvesting, pivoting.
There will be others indicating a long-term broader decline.
2 | Impairment.
If the business did not do well, was it only one quarter or many consecutive quarters?
If the former, take a chill pill & relax.
If more than a couple of quarters, is the business structurally deteriorating faster than expected?
Distinguish the difference.
If the business did not do well, was it only one quarter or many consecutive quarters?
If the former, take a chill pill & relax.
If more than a couple of quarters, is the business structurally deteriorating faster than expected?
Distinguish the difference.
3 | Sell-side forecasts.
If they get it wrong most of the time, why bother.
If they are short-term focused on the next quarter, or the next year, why bother.
It gives me a sense, but I never use it.
If they get it wrong most of the time, why bother.
If they are short-term focused on the next quarter, or the next year, why bother.
It gives me a sense, but I never use it.
4 | Variance.
Aim to be directionally correct, than to be precisely wrong.
A couple of basis or percentage points off here and there, from time to time, is not thesis changing.
If it is, you are probably owning the wrong business.
Aim to be directionally correct, than to be precisely wrong.
A couple of basis or percentage points off here and there, from time to time, is not thesis changing.
If it is, you are probably owning the wrong business.
5 | Noise.
Everyone will have an opinion, and voice theirs out.
Go back to the source of the information and analyse it first on your own.
Others opinions do not matter. What matters is your own.
Have one and you can differentiate between what is noise, and what is not.
Everyone will have an opinion, and voice theirs out.
Go back to the source of the information and analyse it first on your own.
Others opinions do not matter. What matters is your own.
Have one and you can differentiate between what is noise, and what is not.
6 | Price Action.
The stock up? The company did well? Honestly, I don’t know.
The stock down? The company didn’t do well? Honestly, I don’t know.
Short-term price action is almost never telling of how well a business is doing.
The long-term price action is truly what matters.
The stock up? The company did well? Honestly, I don’t know.
The stock down? The company didn’t do well? Honestly, I don’t know.
Short-term price action is almost never telling of how well a business is doing.
The long-term price action is truly what matters.
7 | Price Charts.
Be a business-focused investor, not a price-focused trader.
Short-term prices do not determine how good or bad a business is, long-term prices do.
Technical price charts are more for traders, less for investors.
Price matters, but don’t focus too much on it.
Be a business-focused investor, not a price-focused trader.
Short-term prices do not determine how good or bad a business is, long-term prices do.
Technical price charts are more for traders, less for investors.
Price matters, but don’t focus too much on it.
8 | Conviction.
Nothing beats when you have your own conviction, not borrowed.
Because when there is a massive price decline, that is the biggest test.
When you can think for yourself, you reflect and learn.
If you copy others, you never learn. Know why you own it.
Nothing beats when you have your own conviction, not borrowed.
Because when there is a massive price decline, that is the biggest test.
When you can think for yourself, you reflect and learn.
If you copy others, you never learn. Know why you own it.
9 Perfection.
Some of the businesses will have exceptional quarters.
But some of the businesses won’t.
The objective is not own every businesses that does well every quarter, but most businesses that do very well over the long run.
Some of the businesses will have exceptional quarters.
But some of the businesses won’t.
The objective is not own every businesses that does well every quarter, but most businesses that do very well over the long run.
10 | The Short Game.
The short game is one of expectation vs actuals.
The long game is one of consistency, durability, strength, growth and execution.
Both are very different games. Know which game, one is playing.
The short game is one of expectation vs actuals.
The long game is one of consistency, durability, strength, growth and execution.
Both are very different games. Know which game, one is playing.
➡️ Finally. Have Patience.
Most of the returns come from doing nothing, not from doing something.
Give your businesses the runway, let them run, let them try, and let them thrive.
Don’t keep them on too tight a leash.
Most of the returns come from doing nothing, not from doing something.
Give your businesses the runway, let them run, let them try, and let them thrive.
Don’t keep them on too tight a leash.
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