Useless Stuff

gb study notes – chapter 1

Five Rules

Chapter 1: The Five Rules for Successful Investing

  1. Do Your Homework
    • “… sitting down and reading the annual report cover to cover, checking out industry competitors, and going through past financial statements [pg 2]”
    • why? because you have the possibility of losing your money, you should know about your investment
    • why? because you can’t always trust or rely upon opinions of others
  2. Find Economic Moats
    • moat – A deep wide ditch, usually filled with water, typically surrounding a fortified medieval town, fortress, or castle as a protection against assault []
    • economic moat – the ability of a company to keep “competitors from attacking a firm’s profits”, to protect its profits from the assault of competitors
    • the term economic moat was popularized by Warren Buffett
    • An Important Concept: Typically in a free market, a profitable company will attract competition that will eventually erode the company’s profits.
    • The Key Question: “How does a company manage to keep competitors at bay and earn consistently fat profits? [pg 3]”
    • Related Websites:
      1. A Look at Economic Moats – Investopedia
      2. Digging an Economic Moat – Morningstar (Pat Dorsey)
      3. How Morningstar Measures Motes – Morningstar
      4. Companies with Wide Economic Moats – Street Authority
      5. An Introduction to Economic Moats – Yahoo (Pat Dorsey)
  3. Have a Margin of Safety
  4. Hold for the Long Haul
  5. Know When to Sale

One reply on “gb study notes – chapter 1”

Looks like a good book. I’ll be interested in the rest of your notes and probably will borrow or buy the book someday. Perhaps you ought to do a review for Amazon.