2. Draw the
business
Invest in only those business where you can visualize the entire business
process on a piece of paper with help of a drawing
3. Don’t
Diworsify
• Develop an in depth understanding of 7-8 companies
and their business rather than knowing little bit about
3000 companies
4. Insider
Buying
• If the price falls below the price at which insiders has
bought the stake.
• Then it is worth researching
• Check out the company’s business prospects when it is
borrowing debt to buy back its own shares
5. Do n’t let
thinking
turn into
predicating
• Do not think about future events which cannot be
controlled that is pure speculation.
• Think about the business decisions taken in the present
which can probably lead to better performance in
future.
6. Product vs
company
No of products Contribution to sales Profitability
Capex
requirement
to grow
1 High High Low
2 High Low High
3 Low High Low
value creation process
value destruction line
High valuation zone
Low valuation zone
Value Creation Process: Focus on fundamental factors which aid this process
rest all information is just noise
