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.