Tag Archives: Quality

Beta Downgrade.

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Is volatility a measure of risks? No, which Howard Marks already covered in many interviews. 

However it is a sign of activity which is enhanced or diminished by way of short term news. This news comes via quarterly reports or headlines, and eventually fundamentals, or exogenous events like geopolitical or regulatory changes. 

Unfortunately someone decided to describe volatility as risky. It makes no sense.

An academic investor might think “this company’s beta is 1.5, and that’s too risky an investment to make”. What they may fail to consider if beta is heavily influenced by their thesis is fundamental foundations. 

Yes a business (stock) may have a high beta. 

What if it also has a debt to equity ratio below one? 

What if the high beta company has retained earnings up the last several years? 

What if the high beta company continuously pays down debt, has low capital expenditures, and a rise in revenue and net income? 

If the beta is high but the return on equity, return on assets and liquidity ratios are also high does that mean you have to pass because the beta is rising? 

What if this company also possesses technological immunity from things like ai infrastructure, and automation? 

What If the business beat estimates the last 5 years? Yet you forego the deployment of capital because of a Greek word that means “house” currently functioning above the number 1? 

Economically speaking.

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It doesn’t matter how much yield you can get on a given investment, if the quality of the business backing the underlying investment is not of high quality. It doesn’t matter how good the economic characteristics of the business are in a given investment if you pay too high a price for it.

Sustainability.

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Life is not always about getting more or getting further. It’s also about being able to sustain yourself over time. An important example of this would be with your health. Exercising consistently, and eating more foods that are low calorie with lots of nutrients is one way to sustain your overall health and wellbeing over time. Another thing is being mindful of the company you keep.

You will become similar to those you spend the most time with. If you’re with people who are positive, and have good habits, some of that will rub off on you. And it will probably serve you well in sustaining good character or better habits. Also, maintaining your mental health is another important aspect of being able to sustain yourself over time. Feeding your mind with the right information that is useful and constructive.

Making certain that you are always learning as this leads to mental expansion. When you’re done with all of that, you can than focus on sustaining a good sleeping schedule, since sleep is very critical to your overall health and wellness. Getting good and consistent sleep will allow you to continue to sustain yourself as well. Make today about sustainability.

Question then examine

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If you had to give up one quality, characteristic, or habit of your own, what would be and why?

This will not only reveal who you are, but also help you to figure out who you really want to become.

The work you do

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The work you do will always speak for itself. Yes you can ask people to write reviews for you. Yes you can find ways to yell at people across the street at the local barber shop about it.

Just know that your taking away from the quality (depending on the situation) of your work when you do that. The best time to co-sign the work you do or things you create is when someone has discovered it.

They will ask if they are interested. That is when you start yelling about it to them in your six inch voice (I had to use that).

Discovered work is the most useful and beneficial work. It actually creates a real excitement for that customer who finds it. They believe they are the reason that you are a trending topic in their life for the next five minutes, five days, or 5 months. If your lucky (read “persistent”) enough they will talk about your work for the next five years.

Try giving people a chance. Or yell 80% less than you do now and really perfect what you have going.

Once the quality of your work is able to speak on it’s own yelling will become a thing of the past. You gain more respect as an artist (varies in context, applies to special workers/creators) when your work is discovered by others and it spreads faster.

Less yelling and more hours spent perfecting (without perfection becoming the objection) will get you exactly where you need to be if the work is even worth reviewing.