10 Crucial Investing Ratios 🎯 | Compounding Quality posted on the topic | LinkedIn (2024)

15 Non-investing books everyone should read:• Sapiens - A brief history of humankind (Noah Harari)• Influence - The Psychology of Persuasion (Robert Cialdini)• Think Again (Adam Grant)• Gettings Things Done (David Allen)• The Obstacle Is The Way (Ryan Holiday)• The 4-Hour Workweek (Tim Ferris)• Atomic Habits (James Clear)• The Power of Habit (Charles Duhigg)• Tiny Habits (BJ Fogg)• Good Habits, Bad Habits (Wendy Wood)• Deep Work (Cal Newport)• Rework (Jason Fried & David Heinemeier)• 12 Rules for Life (Jordan Peterson)• The 7 Habits of Highly Effective People (Stephen Covey)• Eat That Frog! (Brian Tracy)Source visuals: TK Suited📚 You want to receive these 15 visuals in high resolution in a handy PDF? Grab it here:https://lnkd.in/dFtf3P_V

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How to outperform the marketUse these rules to improve your return1. Size mattersIn general, small cap stocks perform better than large cap stocks due to the law of large numbers.Small cap stocks outperformed large cap stocks on average by 3.6% (!) per year between 1927 and 2009.2. Valuation matters tooThe cheaper you can buy a stock, the better.Buying the cheapest stocks based on a simple price-to-sales ratio managed to outperform the market with 3% per year, achieving an annual return of 14.2% (!).3. High dividend stocks do NOT outperformWhen you want to invest in dividends stocks, don’t focus on dividend yield.Focus on dividend aristocrats (stocks with more than 25 years of consecutive dividend increases) with a durable payout ratio.4. Free cash flow is kingCompanies with the lowest accruals-to-price (where most earnings are translated into free cash flow) outperformed companies with the highest accruals-to-price with 5.3% per year.Earnings are an opinion. Cash is a fact. Focus on free cash flow.5. The healthier balance sheet, the betterQuality investors invest in companies with a healthy balance sheet.Companies with the highest cash flow to debt (healthiest balance sheet) outperformed companies with the least healthy balance sheet with 8.0% (!) per year.6. Don’t look at profit margins aloneInvesting in companies with high profit margins does not work if the company doesn't have a competitive advantage.When a company has a high profit margin but no moat, rivals will enter the market and reversion to the mean takes place.7. Return On Equity (ROE)When you would have bought the stocks with the highest ROE, you only would have slightly outperformed the market.However, in general it is a very good idea to combine good capital allocation metrics with a high profitability.8. Momentum works greatIn the short term, what goes up tends to keep going up and what goes down tends to keep going down.A momentum-based strategy would have generated a return of 14.1% (!) per year over the studied period. This is an annual performance of 3.6% per year.9. Golden egg: momentum + valueCombining momentum and value (Trending Value) achieved an annual return of 21.2% (!) per year between 1964 and 2009.This is an annual outperformance of 10% (!) per year.10. Consistency is keyThere are a lot of strategies that outperform the market. In general, it is important to note that you should stick to the strategy that suits you as an investor...... by definition, every active strategy will underperform the market from time to time. Discipline and consistency are key.Keep faith to your strategy and you’ll end up fine.Investing is a marathon, not a sprint. 📚 You want to learn more? Download my investing e-book here:https://lnkd.in/ebvU2Exh

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When to sell a stockIt's easy to buy a stockBut when should you sell?Here are 7 reasons to sell a stock 👇1️⃣ You made a mistakeIf you bought a stock for a certain reason and after a while it turns out that you’ve made an error of judgement, you should consider selling the stock.Example: I sold Starbucks because I spoke with some employees of $SBX who stated that the company’s moat wasn’t as wide as I initially thought. 2️⃣ You've found a better opportunityYou should always own the best companies you possibly can which generate the most attractive risk-return characteristics for you as an investor.Example: I sold a big part of my position in a stock that increased with more than 150% in 3 months and added to my position in a great US owner-operator quality stock.3️⃣ The company is losing its moatSuccessful companies must reinvent themselves all the time to keep their competitive advantage. Example: Nokia used to be the clear market leader in the phone market. In 2007, they had a market share of 49.4% (!). They lost their edge completely over the years because they didn’t take the treat of smartphones seriously. 4️⃣ The stock is overvaluedThis is by far the most dangerous reason to sell a stock. Why? Because great companies always tend to exceed expectations. Example: Artificial Intelligence will change our lives and companies active in AI will grow exponentially. However, these companies are valued very expensively today. 5️⃣ Change in managementWhen great managers start leaving the company, it might be a reason to sell the stock.Example: In 2014, Bob Kierlin, CEO and founder of Fastenal, retired from Fastenal’s board. As a result, quality investor François Rochon sold the stock. After 2014 the stock still performed very well but not as good as it used to.6️⃣ Growth is slowing downTo generate above-average returns as an investor, you should own companies which are able to grow their earnings at above-average rates.Example: Coca-Cola is a beautiful company. Today they sell more than 1.9 billion (!) servings per day. Due to their size, Coca-Cola won’t be able to grow at let’s say 10% per year.7️⃣ Need for cashIf you need cash, it might make sense to sell the least attractive stock you own. Example: You need cash to buy a house or support your children. As a result, you sell the least attractive stock in your portfolio.📚 You want to learn more? Download my investing e-book here:https://lnkd.in/ebvU2Exh

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1,000+ KPIsEvery company can use these KPisSalesBusiness Development TeamChannel Sales TeamCustomer Success TeamInside Sales TeamKey Account Management TeamOutside Sales TeamSales Development TeamSales Enablement TeamSales Operations TeamSales Training and Coaching TeamData Big Data TeamBusiness Intelligence TeamData Analytics TeamData Engineering TeamData Governance TeamData Quality TeamData Science TeamData Security TeamData Visualization TeamDatabase Administration TeamFinanceAccounts PayableAccounts ReceivableCredit and CollectionsFinancial Planning & AnalysisFinancial SystemsInternal AuditInvestor RelationsRisk ManagementTaxTreasuryMarketingAdvertisingAnalyticsBrand ManagementChannel MarketingCreative ServicesDigital MarketingEvent MarketingMarket ResearchOverall Marketing DepartmentProduct MarketingPublic RelationsGeneral CounselContracts and Commercial Law GroupCorporate Governance and Compliance GroupEmployment Law GroupEthics and Risk Management GroupIntellectual Property GroupInternational Law GroupLitigation and Dispute Resolution GroupMergers and Acquisitions GroupReal Estate and Environmental Law GroupRegulatory and Government Affairs GroupHuman ResourcesCompensation and BenefitsDiversity, Equity, and Inclusion (DEI)Employee RelationsHealth and WellnessHR Analytics/Data ManagementHR Information Systems/TechnologyHR Operations/AdministrationLearning and Development/TrainingPerformance ManagementTalent Acquisition/RecruitingInformation TechnologyApplication Development and MaintenanceData Management and AnalyticsEnterprise ArchitectureInformation SecurityIT Governance and ComplianceIT Service ManagementNetworkingSoftware Engineering and Quality AssuranceSystem AdministrationUser Support and TrainingOperations Business Process ManagementContinuous Improvement/Lean Six SigmaCustomer serviceEngineeringFacilities ManagementHealth and SafetyManufacturing/ProductionProcurementProject ManagementQuality Assurance/ControlProduct AnalyticsCustomer SupportProduct DevelopmentProduct ManagementProduct MarketingQuality Assurance (QA)Technical WritingUser Experience (UX) DesignUser ResearchResearch and Development (R&D)AnalyticsDevelopmentEngineeringIntellectual PropertyProduct ManagementProject ManagementPrototype & TestingQuality AssuranceResearchTechnical Writing & DocumentationSupply Chain BuyingInventory ManagementLogistics/TransportationProduction Planning and SchedulingQuality Control/AssuranceStrategic SourcingSupplier Relationship ManagementSustainability and Corporate Social ResponsibilityWarehousing/DistributionCredit:Will Bachman📚 Grab the PDF in high resolution here:https://lnkd.in/eJ8H9psn

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Financial Modeling 101What's a financial model?A financial model is like a big calculator that helps businesses and individuals plan and make decisions about money. It's a tool that uses numbers to show how things might turn out in the future.Here's what you'll learn:• Basic Guidelines for Financial Models• Revenue and Customer Acquisition Models• Cost of Goods Sold (COGS)• Personnel Costs (SG&A Expenses Part 1)• Other Overhead Expenses (SG&A Expenses Part 2)• Nonoperating Expenses• Common Financial Modeling Mistakes• Balance Sheet• Brief Digression on Cash Flow• Cash Flow Statement• Advanced Modeling Techniques• Expense Checklist Source: Dave Lishego📚 Grab the PDF in high resolution here:https://lnkd.in/dstKKajZ

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Data & Analytics GuideHere's everything you need to knowThe essence of data and analytics is about turning raw information into useful insights to help businesses make smarter decisions. It involves:1. Information Extraction: Collecting and analyzing data from various sources.2. Decision Support: Using insights to make informed and effective decisions.3. Business Intelligence: Understanding market trends, customer behaviors, and competition.4. Performance Measurement: Tracking and assessing the success of strategies.5. Predictive Capabilities: Forecasting future trends and outcomes.6. Innovation and Optimization: Finding new opportunities and improving existing processes.7. Personalization: Tailoring products and services based on individual preferences.8. Data-Driven Culture: Encouraging decision-making based on data and evidence.9. Continuous Improvement: Using data for ongoing refinement and better performance.📚 Grab the PDF in high resolution here: https://lnkd.in/eUgCNQkW

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BibleHere are 10 formulas everyone should know1. SUM:Adds up all the numbers in a range.Example: =SUM(A1:A5)2. AVERAGE:Calculates the average of a range of numbers.Example: =AVERAGE(B1:B10)3. COUNT:Counts the number of cells that contain numbers.Example: =COUNT(C1:C8)4. IF:Performs a conditional test and returns one value if true, another if false.Example: =IF(A1>10, "Yes", "No")5. VLOOKUP:Searches for a value in the first column of a range and returns a value in the same row from another column.Example: =VLOOKUP(D1, A1:B10, 2, FALSE)6. HLOOKUP:Similar to VLOOKUP, but searches for a value in the first row of a range and returns a value in the same column from another row.Example: =HLOOKUP(E1, A1:D5, 3, FALSE)7. INDEX/MATCH:Retrieves a value at the intersection of a particular row and column in a given range.Example: =INDEX(A1:C5, MATCH("John", A1:A5, 0), 2)8. CONCATENATE:Combines two or more text strings into one.Example: =CONCATENATE(A1, " ", B1)9. LEFT/RIGHT/MID:Extracts characters from a text string.Example: =LEFT(A1, 3) (returns the first 3 characters of A1)10. SUMIF:Adds up all numbers in a range that meet specified criteria.Example: =SUMIF(C1:C10, ">50")📚 Grab the PDF in high resolution here: https://lnkd.in/eh4m-uZU

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I struggled reading annual reportsYou know what was a game changer?The 6-step framework from Aswath DamodaranYou can steal it here: Have clear goalsAlways know why you are reading an annual report. What's your purpose?Here are 5 essential things:- Cash Flows- Investments in Future Growth- Operational Efficiency- Quality of Earnings- Risk1️⃣ Cash Flows- How much revenue is translated into cash flow?- How much capital does the company need to generate these cash flows?Free Cash Flow per share growth is one of the main drivers for stock prices.2️⃣ Investments in Future Growth- How much growth is generated by increased productivity?- How much growth CAPEX does the company use?3️⃣ Operational Efficiency- How efficiently does the company allocate capital?- Does management put a lot of emphasis on operational efficiency?The better the capital allocation skills of management, the better for you as an investor.4️⃣ Quality of EarningsNot all earnings are created equalLook for:- Amount reinvested- Return on invested capital (ROIC)5️⃣ RiskThere are two primary concerns regarding risk:- Operational risk involves issues related to the core business activities of the company.- Financing risk pertains to challenges associated with the company's funding methods.Now you know what you're looking for and why, you can start using Damodaran's 6-step approach.Step 1:Confirm the timing and currency- What period is covered?- What currency are they reporting in?Step 2:Map the business mix:- In which segment does the company operates?- What does the geographic breakdown look like? Step 3:Find the base inputs for valuationFrom the Balance Sheet:• How much debt the company have?• Does the company have more current assets and current liabilities?• Does the company have a lot of goodwill on its balance sheet ImageFrom the Income Statement• Are revenues steadily increasing over time?• Does the company need a lot of COGS to sell its products?• How much revenue is translated into net income? From the Cash Flow Statement• Are most earnings translated into operating cash flow?• Does the company have a positive free cash flow (operating cash flow – CAPEX)?• Did the company manage to increase its cash position compared to last year?Step 4:Keep diggingIn the footnotes look for:- Does the company use a lot of SBCs?- When does the company's debt mature?- ...Step 5:Confirm The Units- How many shares outstanding does the company have?- Does the company have preferred shares?- Are acquisitions paid with stocks?Step 6:Corporate Governance- Do insiders get special priveleges?- Does management have a lot of skin in the game? __📚 You liked this? Grab my Financial Analysis Course for free:https://lnkd.in/ewnHQ_Sw

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Investment MatrixAn overview with all assets classesYou'll learn about:• Savings accounts• Time deposit accounts• Long Term Negotiable Certificate of Deposit (LTNCD)• Treasury bills (T-bills)• Fixed Rate Treasury notes (FXTNs)• Retail Treasury Bonds (RTBs)• Corporate bonds• Equities (common stocks)• Equities (preferred stocks)• REITS• Money market funds• Bond funds• Equity index funds• Equity non-index funds• Balanced funds• Personal Equity and Retirement Account (PERA)• PAGIBIG MP2• SSS Peso Fund• SSS Flexi Fund• Cooperatives• Real Estate• BusinessSource: phinvest (by u/speqter and u/tagongpangalan)💡 You want to receive this document in high resolution? Grab it here:https://lnkd.in/eh8qxHbm

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Aswath Damadoran is the Dean of Valuation.He has taught millions of people how to value a company.Today I am sharing his valuation class (worth thousands of $) for free5 Rules on which Aswath Damodaran has built his success:1️⃣ Principle of Intrinsic ValuationDamodaran emphasizes the importance of intrinsic valuation, which involves estimating the fundamental value of an asset based on its expected future cash flows. He often advocates for using discounted cash flow (DCF) analysis to determine the present value of future cash flows.2️⃣ Risk and Discount RatesDamodaran stresses the significance of understanding and incorporating risk into the valuation process. He suggests using appropriate discount rates that reflect the risk associated with an investment. This may involve considering factors such as the company's beta, cost of equity, and risk-free rate.3️⃣ Narrative and NumbersDamodaran emphasizes the need to combine both qualitative and quantitative analysis. While financial numbers are crucial, understanding the narrative or story behind those numbers is equally important. Investors should consider both aspects to make informed investment decisions.4️⃣ Market Efficiency and Behavioral FinanceDamodaran recognizes the efficiency of markets but also acknowledges that markets can be irrational in the short term. He incorporates insights from behavioral finance into his analysis, recognizing that investor behavior may deviate from rational expectations.5️⃣ Margin of SafetyWhile this principle is not unique to Damodaran, he does emphasize the importance of incorporating a margin of safety in valuation. Investors should build a margin of safety into their estimates to account for uncertainties and unexpected events.📚 Grab the document in high resolution here:https://lnkd.in/eSdWRMyH

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