If you want to make a good investment you need to know the business in details and not only firm's but also the sector and the market(country, region) in which it operates.
How I do it? I have a kind of a list in my mind, it looks similar to this below:
- What is the product of the company?
- Is the firm is still managed by it's founder?
- Which are the competitors of the company?
- Does the business depends on a commodity?
- Is there a cyclicality in the sales?
- How is performing the management of the firm?
- How much the sales are falling or growing in good and bad periods?
- Does the company needs a lot of loans for it's operations?
- When does the company receives the cash? In the case of Walmart it is immediate but most companies receive the cash after months or in pieces.
- Inventory specifications. Like, is it durable? Or, how long could be stored? There are products which could be sold for the same price 3 years after the production. And some as food which will be obsolete in a month.
- If possible visit the company.
- Does the company have products or services with sufficient market potential to make possible a sizable increase in sales for at least several years?
My thoughts about investing are constantly changing. This is what I thing at the end of 2019 after 3 years of investing experience.
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