Finding a company worth investing in.
Actually easier done that said.
This is the first stage of the technique of finding companies worth investing in. I won’t be ambiguous and I will also not go into figures. You just need to understand and remember this simple analogy.
Companies are like people. (Because they are run by them)
Let’s take two test cases A & B
“A” Earns 100K per year he has a large mortgage and spends most of his earnings per year. He has quite a big loan on a flash car and has also taken a loan for a luxury holiday. He is in debt but does have the money to pay back his loans. In essence he earns well, lives well but is in debt outside of his mortgage.
“ B “ Earns 60K per year, has a mortgage, an average car, but no debt and is a bit tight with his money and saves about 30 % of his income per month. In essence “B” is saving money to reinvest in his future.
Which one would you invest in?
We will discuss why in the next post. There is no right or wrong. Just a probable outcome.