Last week, I went to a park for a stroll, I met a 13-year-old guy sitting around starring at those beautiful trees and thinking about something. I walked to him said hi, the conversation started we asked each other what we do, what are our goals and blah blah. He told me he likes to invest his spare pocket money. We came to a serious discussion about finance in general and investing.
He said I don’t really understand the notion of financial advice, financial management, and investments. I said even I am learning and figuring out much stuff that is out there, do they really matter, or it’s just for the sake of boredom. We discussed about basics of money, why to save and why to earn more spend less, and so on. At the end he told me I don’t know much about these detailed analyses, for me it’s like if I know something(know the business), I understand something(its revenue streams, its expenses and profit) I am ready to do some study(ask my parents ,see it on the internet) and will put my money into it.
We bought a small coffee shop, I invested my money with my dad, the business is operated by my mother she makes coffee for $0.80 sell it for $4.50.
I think I learnt a lot that time, it’s like its more common sense towards investing, I remember my dad using Gillette when I was little, I knew the company , I might have that time (wish I did it) search the share price, see its profit , one share($7) would be $108 in today’s money. I don’t know why we grow and make our life complicated as in the end its simple stuff we like and use, that really counts. These are words from Charlie Munger – “We have a passion for keeping things simple”.
It’s very important to see a company naked, what in its core it does, how much it earns and how much its psychologically impacting its customers. Investing is process of eliminating necessary EBITDAs, BETAs and much more.
Everything else is a bubble.