Investing Philosophy

Copyright 2017, 2023- W8 Group, LLC

In August 2017, I knew my investing philosophy, but struggled to communicate it concisely. So I took a sheet of yellow legal paper and sketched out three circles in a Venn diagram and wrote “management,” “moat,” and “price” in one of the circles.

From there, I asked myself, “What do I mean by each of those things?” And I expanded on those concepts in the margins around the circles.

I also found the points in the diagram where two circles were joined, but not all three. Those I labeled “traps” to be avoided. For example, if price and moat overlapped, but not management, that could mean poor capital allocation by management might lead to moat erosion. In turn, that would drag down returns on invested capital over time, and lead to poor returns.

Since revisiting the diagram (latest version above), I added a few points in the margins, but the core remains the same.

It’s important to note that no company on earth checks off all of the characteristics I list in the margins. That said, I expect any company I invest in to check off at least some in each box.

After taking my legal pad sketch and putting it into a Google drawing program, I posted it on Twitter, and it made its rounds on FinTwit. Shortly after publishing, I wrote a post about the process and how to address the traps in the diagram, which you can find here.

I’ll reference this philosophy diagram in future posts, so I wanted everyone at Flyover Stocks to have this page to refer back to for clarification.

Stay patient, stay focused.


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This material is published by W8 Group, LLC and is for informational, entertainment, and educational purposes only and is not financial advice or a solicitation to deal in any of the securities mentioned. All investments carry risks, including the risk of losing all your investment. Investors should carefully consider the risks involved before making any investment decision. Be sure to do your own due diligence before making an investment of any kind.

At time of publication, the author or his family may have an interest in the securities mentioned or discussed. Any ownership of this kind will be disclosed at the time of publication, but may not be updated if ownership of a particular security changes after publication.

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