Hey 👋 – Thomas here.
Good day to my fellow compounders!
In 3-Bullet Sunday, I share with you the three most interesting piece of article, video or podcast I came across for the week on investing and growth philosophies.
But before that, I want to share with you something personal…
Had an awesome meet-up with Singapore participants from our investing course!
When I quit my job to start writing full time on my blog, I had no idea it would grow into what it is now. • More than 40,000 Twitter followers • Close to 10,000 newsletter subscribers • Hundreds of stocks research reports members • Taught more than 100 participants from 20 different countries.
All this without running ads. By putting out valuable content and doubling down on what resonates with my readers.
Grateful for everything that has happened and for those who have helped me along the way 🙏
Alright, let’s get back to this week’s issue of 3-Bullet Sunday.
Enjoy!
I. Fundsmith semi-annual letter by Terry Smith
Some of my highlights:
- ” Interest rates as a tool to combat inflation are a blunt instrument at the best of times and I suspect more so in this instance where the inflation has not been caused by demand exceeding supply during an economic boom.”
- “Higher interest rates will do nothing to correct the continuing supply problems in commodities, semiconductors and just about everything else so it may also take some time and high interest rates for demand to become depressed enough for the supply to exceed it and so start to moderate price inflation.”
- “The best defence against this inflation is a high gross margin — the difference between sales revenues and COGS. “
- “In inflationary periods, an acronym which is sometimes used to describe the investment options is TINA — There Is No Alternative. It refers to the concept that equities will be the least poorly performing sector in such conditions because of the ability of at least some companies to continue to grow revenues in real terms and generate real returns on capital above the rate of inflation.”
>> Click here to read Terry Smith’s letter
II. Presentation by Bill Ackman on the current inflation policy and potential stagflationary environment.
Ackman draws on history and current data to present scenarios that are likely to happen.
He demonstrated that inflation is largely driven by a strong demand for services and is likely to persist due to:
- Excess household savings
- Large untapped borrowing capacity
- Tight labor market
- Industrial capacity utilization rates at peak level
>> Click here to download the presentation slides
III. Everything Is a DCF Model
It doesn’t matter if you are into dividend, deep-value or growth investing.
It all goes back to first principles—the discounted cash flow model (DCF)
A thorough understanding of value creation goes a long way when analyzing opportunities in the stock market.
I have written a comprehensive guide on valuation with a free intrinsic value calculator here in the past: https://steadycompounding.com/investing/valuation/
>> Click here to read everything is a DCF model
That’s all for this Sunday.
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See you again next week.
Cheers,
Thomas
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