Analyzing Good Businesses (AGB)
Disclaimer: Please be advised that AGB is not investment advice. We may or may not own securities that are mentioned in the issues of AGB.
Success of long-term investing can be determined by answering two questions:
What is the average annual rate of intrinsic value growth?
What price (multiple) do you pay today?
AGB aims to tackles the first question both qualitatively and quantitatively.
The rate of intrinsic value growth can be broken down to:
Returns on incremental capital
Reinvestment rate (opportunity)
AGB analyzes the reasons that both of these metrics are and will remain high for good businesses, and thereby compound intrinsic value.
AGB does not discuss the second question because (1) prices fluctuate, (2) valuation is different for everyone, (3) and most will find little value in it.
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