Understanding restaurant franchises – Domino’s Pizza

Understanding restaurant franchises – Domino’s Pizza

For anyone looking to start learning how to invest, I would always recommend starting with products or services you use. Being a foodie myself, F&B naturally falls within my circle of competence!

Before we even dive into today’s main topic, when selecting F&B companies as investment, always choose companies with products that could become part of their customer’s routine. Even better if it’s a little addictive.

How growth, return on capital, and the discount rate affects valuation

How growth, return on capital, and the discount rate affects valuation

Nobody will know where interest rates are headed, but it is important to appreciate the relationship between the discount rate and long-duration assets. In other words, we should be mindful that an increase in interest rates will bring down the valuation of companies that are investing heavily today for higher future cash flows tomorrow.

It is also important to bear in mind that for most companies, return on capital will eventually drift lower with competition, maturation, obsolescence, and disruption. Without a moat protecting its returns, the company will suffer a multiple contraction as observed above.

Why pay up for quality businesses?

Why pay up for quality businesses?

Over the long term, it’s hard for a stock to earn a much better return that the business which underlies it earns. Likewise for companies that are able to sustainably generate returns above cost of capital, they would rightfully deserve a higher multiple.

Lessons from The Psychology of Money

Lessons from The Psychology of Money

The Psychology of Money is one of the most highly anticipated books for finance enthusiasts in 2020. Morgan Housel has a knack for writing beautifully and a flair for capturing abstract concepts onto paper. This is not at all common for writings on the topic of finance.

Reading this book made me reflect a lot and helped fine-tune my thinking. It also made me think a lot about the problems many of my friends shared with me. Keeping up with the Joneses, staying in a job that’s costing their health for the high paycheck, and worrying about stock market volatility.

I had a tough time writing the key lessons from this book because it’s filled with great insights. After much deliberation, the following are my key takeaways which would be helpful both for my friends and I.

Advice to my 20-year-old self

Advice to my 20-year-old self

In my early 20s, I remember asking older folks a bunch of questions. Trying to pick up some guiding principles for decision-making. Choosing the ‘right’ university, career and on how to manage money.

Fast forward a decade later, these are advice I wish I have heard back in my early 20s.

Becoming 30: Receiving a message from my younger self

Becoming 30: Receiving a message from my younger self

On 23 Jan 2020, I opened my inbox and read the subject title “WHAT’S NEXT?”

It was a delayed message sent by my younger self to pause and reflect. I set the delayed message years back.

Looking back at my journals, I was worried that I would lose my drive and hunger overtime after having mini-successes.

Through my growing up years, I have been always struggling to balance between 2 fears — the fear of cruising along my life and the fear of change.

Underlying all the reasons for resisting change are two fundamental cause — fear and homeostasis.

Initiated a position in Fastly

Initiated a position in Fastly

Initiated a stake in Fastly this week to make myself follow through on deep diving into this company. They reported a strong set of Q2 results, with revenue rising 61.7% y-o-y. It was also the first time their EPS became positive, at $0.02 per share. Yet its share price took a hit and declined 33%. Largely due to Donald Trump threatening to ban Tik Tok, which accounts for 12% of Fastly’s revenue.