Looking Past the numbers

It is like a finger pointing away to the moon. Don’t concentrate on the finger, or you will miss all that heavenly glory.

Most of the time, we look very closely and deeply into the financial numbers of companies to understand them. Their growth, their margins, the segments breakdowns, their foundations and their capital allocations.

While all these are extremely important, we must always look at the final “objectives”, the moon.

On the ground products, demand and consumer behavior.

What are as equally important are the numbers on the ground as compared to numbers in financial statements and annual reports.

The very mere fact that one is historical data and one is present tells us where to look first if we are looking to invest in a business.

The ability to accurately estimate from the ground up is important. Example, just by looking at a retail shop, can we accurately estimate its sales?

It might seem like a wild guess and baseless assumptions, but trust me, business is not that complicated.

The more familiar we are with the type of business we are looking at, the more accurately we will be able to estimate its current sales from the ground up just by frequenting the shops ourselves. Thus, isn’t it better to have already know how the business will perform this quarter before their numbers are out?

Thus, as investors, we must work hard and strive to have an intimate understanding of our own business, products, demand and our consumer behavior.

Spending huge amount of time and effort to build a relationship with the business is much more important than the act of investing in it. And every now and then, this intimate knowledge and understanding of the business might just strike and help you to figure out what would happen in the next 10, 20 years.


Thank you for reading.

~ sowing the seeds of tomorrow

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