Stocks are part-ownership stakes in real businesses.
Stay focused on the business narrative, not the price narrative. Over the long term, the key determinant of whether the share price rises or falls will depend on the business itself, and whether it has growing revenues, profits and free cash flows. Over time, stock prices converge to each business’ intrinsic value. But the rate of return at any point in time differs, depending on your original purchase price. A great business does not always make a great investment. The rate of return is generally predicated on the growth in revenues that leads to growth in earnings or cash flows. These factors play a part in determining if its stock price will rise....The greatest secrets of investing are neither taught in schools nor at traditional financial firms.
As an investor of six years, I am fortunate to have learnt from the best, and would like to share 16 of the greatest lessons I have picked up.
