Dear Anand .. If I see the general Patterns in your writing you don't think banks are great business... Am I right in my understanding that you avoid banks and NBFC completely irrespective of how strong the track record and other traits are....?
Fantastic essay. If one had to ask, "What one question does this essay answer?", My response would be "Why are P/E ratios meaningless?"
The minutiae that go into selecting the sector, industry, and the company include an implicit margin-of-safety component. Even if they may not provide the rationalizing brain a reason/meaning as is the case in a late stage check.
"Except the final stage, every check is qualitative, asking the question “Safe enough?” summarises it perfectly. Came across this thought process while reading Seth Klarman's posts. A common fallacy people commit, he highlights, is using Margin of Safety as a lazy way to account for all the "known-unknowns". His 'at least 40% MOS' approach is rather for the "unknown-unknowns". Always found that really powerful.
"A final layer of safety is added by linking valuation to real financials, in an empirically-grounded manner." This sentence is not clear, can u elaborate, please?
Margin of safety 2.0
Dear Anand .. If I see the general Patterns in your writing you don't think banks are great business... Am I right in my understanding that you avoid banks and NBFC completely irrespective of how strong the track record and other traits are....?
Fantastic essay. If one had to ask, "What one question does this essay answer?", My response would be "Why are P/E ratios meaningless?"
The minutiae that go into selecting the sector, industry, and the company include an implicit margin-of-safety component. Even if they may not provide the rationalizing brain a reason/meaning as is the case in a late stage check.
"Except the final stage, every check is qualitative, asking the question “Safe enough?” summarises it perfectly. Came across this thought process while reading Seth Klarman's posts. A common fallacy people commit, he highlights, is using Margin of Safety as a lazy way to account for all the "known-unknowns". His 'at least 40% MOS' approach is rather for the "unknown-unknowns". Always found that really powerful.
I love the way you construct these posts. Simple, informative and straight-from-the-heart. Keep them coming. :)
"A final layer of safety is added by linking valuation to real financials, in an empirically-grounded manner." This sentence is not clear, can u elaborate, please?