Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Buffettology -- Ignore unavailable to you. Want to Upgrade?

To: peter michaelson who wrote (436)	10/18/1998 1:42:00 AM
From: James Clarke	Read Replies (1) \| Respond to of 4691

<<The part I enjoyed most about doing buy-outs was the Eureka when you start to truly understand what drives the business. I used to say there were four or five key factors in each business which really drove the financial projections. Many CEO and CFO's were so busy juggling scores of variables that they forgot which were the really important ones.>> Very well said, and worth reading again and again. That "Eureka" is the key to good investing in my book. Most of my best investments looked interesting enough to dig deeper, then at some point I got that "Eureka" feeling when it all came together and I understood what I was looking at. Sometimes that Eureka was valuation - like "Jeepers! This puppy is worth three times what its trading at." Other times it was what the above post reflects. When all of a sudden you understand that you're looking at a great business, and nobody else sees it, it is a great feeling. [Dig into Ambac (ABK) if you like financial stocks - or even if you don't - and don't stop until you say Eureka. Trust me.] And the post also reflects another thing - it is usually very simple - a couple of key points. Peter Lynch says you should be able to draw any good investment with a crayon. And most great businesses can be explained in two sentences. It is so hard to practice that - I find my WORST investments come when I get to clever and try to create a complex investment case where it doesn't exist.