Hey Reader,
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Did you know? Peter Lynch, the legendary Fidelity fund manager, discovered Dunkin' Donuts as an investment opportunity simply because he enjoyed their coffee. This exemplifies his "invest in what you know" philosophy.

In today's issue:

• Why Buffett thinks earnings are overrated and what to do instead.
• How to value a brand like Coke, Nike, or Airbnb
• Michael Mauboussin schools us on ROIC
• Understanding a balance sheet
• And much more.......

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💎NUGGETS

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My Favorite Finds

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Brian Ferolid explains why Warren Buffett thinks earnings growth is overrated and what we should look for instead (surprised me).

Michael Mauboussin teaches us why ROICs change and what we can learn from them (always a must-read).

Do brands add value? Surprise! Aswath Damodaran shows us how to value a brand with examples.

Ever wonder how to use a Backdoor Roth? I didn't understand it until now. This is a great thread explaining the process.

​This is a great breakdown of an often misunderstood Charlie Munger speech. It helps us identify the five ways to unravel any problem.

Here are five lessons on how to move to the next level with quality investing. None of it is complicated, but it does involve doing a lot of nothing (which is hard).

🔍DEEP DIVE

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Understanding a Balance Sheet:
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A balance sheet is a financial snapshot that reveals a company's financial health at a specific time. It's structured around the fundamental accounting equation:​
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𝗔𝘀𝘀𝗲𝘁𝘀 = 𝗟𝗶𝗮𝗯𝗶𝗹𝗶𝘁𝗶𝗲𝘀 + 𝗦𝗵𝗮𝗿𝗲𝗵𝗼𝗹𝗱𝗲𝗿𝘀' 𝗘𝗾𝘂𝗶𝘁𝘆
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Think of it like a scale; both sides must always balance.​
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​Assets represent a company's assets, including tangible items like cash, inventory, and property, and intangible assets like patents and trademarks.
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​Liabilities are what a company owes to others, such as loans, accounts payable (money owed to suppliers), and deferred revenue (payments received for goods or services not yet delivered).
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​Shareholders' Equity represents the owners' stake in the company. It's the residual interest in assets after deducting liabilities. This includes contributed capital (money invested by shareholders) and retained earnings (profits reinvested in the business).
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By analyzing a balance sheet, investors can assess a company's liquidity (ability to meet short-term obligations), solvency (ability to meet long-term obligations), and overall financial risk.
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Understanding this fundamental financial statement is crucial for making informed investment decisions.

📖Knowledge Tidbits

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The Investing for Beginners Podcast @IFB_podcast 4 Ways to Value a Company: 10:5 AM • Oct 1, 2024 218 Retweets 988 Likes Read 4 replies

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Thanks,
Dave Ahern
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​einvestingforbeginners.com​
​Investing for Beginners Podcast​

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When you're ready, here's how we can help you:

​Value Spotlight: Stock market investors can save time and find success by discovering the right tools and resources. If you don't know where to start, or are simply tired of wading through the endless sea of financial information, Value Spotlight was created for you.

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