This is Part 2 of the note by Balaji Sridharan, an equity investor, who shares his approach and thought process on investing.
In Part 1 he suggests that every equity investor asks two questions:
- Am I an above average investor objectively?
- Is investing worth my time?
He then goes to explain how possibly can an individual investor seek those answers.
Subsequently, he questions whether one is ready to be an equity investor by taking up three 3 hurdles that one has to face.
You can read the Part 1 here.
Part 2 continues.
Once you are past all these hurdles, the question “how does one think about companies” arises?
There is enough literature out there from Ben Graham, Seth Klarman to Phil Fisher taking from deep value to high quality, growth companies. We will not rehash about any of these. Instead we will talk about a few of the filters that I use to pick stocks.
At the top of the list is whether the business is predictable.
What this essentially means is that can you envision what the company will look like five years from now?
