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The easiest way to invest in companies that know when should the axis – Netflix (Nasdaq: Nflx), Apple (NASDAQ: AAPL)

When you use Basic analysis To estimate the value of the shares, you must make a lot of expectations.

How fast sales growth? Will you expand or contract profit margins? How will the company’s capital structure look like, and Where will interest rates go?? Where will the tax rates be in the future?

If the expectations you put in your evaluation form are stopped, the value you calculate will be extinguisher. Analysts call this phenomenon “Garbage in, garbage outside.

To prove how difficult this exercise, let’s try to drop sales to A1 Widgets Corporation, a virtual company is the leading company around the world in selling non -destructive user interface. Based on the A1 request book, mini -sales will grow for exactly five years. In the fifth year, every person in the world who will need an interface element will get one. From there, there will be no more demand for needs, and the piece factories will be closed.

How will A1 sales look after the fifth year?

If you say $ 0, you will be wrong.

Since the owners and management of the A1 had insight for a calm foothold in the emerging cloud infrastructure and artificial intelligence technology companies. As a result, the company will soon see sales and growth more than ever. The eclipse profits will make the user interface elements. The stock price will explode.

No, this was not a trick question.

There are countless examples of companies that are expanding or an explicit axis for companies that no one can expect.

The best financing deals today

Buying an arrow is more than investing in the company’s product 🤔

The presence of a great product for sale is not enough to have a work that generates a great return for shareholders for many years to come.

You should also have a great management with a fatal instinct to customize the capital.

The administration does not only have to know how to sell the company’s primary product for growth and profitability, but they must also be able to read tea leaves and learn about the date of the tidal transformation. The product market may be saturated. Perhaps the product is old. Customer preferences may turn with technological developments. Perhaps there are other important opportunities to follow up, and the company has both financial and experience to benefit from.

Most companies are constantly making hidden adjustments that often pass largely without anyone noticing. Some repairing their entire business.

Berkshire Hathaway, which was a fabric company when Warren Buffett took over in 1965. Insurance company Also that I sold candy. Today, it is a variety that sells everything from energy to aircraft parts to underwear. And he has a Huge shares Getting returns in the market. (I discussed the culture of change in Berkshire in A. The last appearance on Yahoo financing))

Another famous example of the company that has undergone a complete transformation is Netflix. The company identified the change when it provided DVD rents by mail while many consumers were still walking in the brick and mortar video stores. Although it took control of the mail -based lease, the administration has quickly turned its efforts and has invested strongly in broadcasting services and original content. In 2023, Netflix She sent her last DVD tablet. the stock It is currently trading at the highest level, as the company has reached more than $ 500 billion.

Last week, I was on Yahoo Finance “Arrows in Translation” Podcast with Jared Backer and Sidni Farid. (Capture him Yahoo financingand Apple podcastand SpotifyOr YouTube!) Jared bring Apple, which was born Sales of 96 billion dollars From services.

This is what I said about Apple during our discussion:

If we were talking about the rating 25 years ago when Apple was only making desktop computers, [you would ask] How many computers can sell them before you reach the ceiling? Thus, if you only think about investing in a company that makes computers only, then, it may not make sense to pay in addition to the shares you buy. But if you can be a little more creative, and if you understand that this is a company that understands change and adjusts its business model as the world changes, and with its reaches to a satisfactory point, you can start imagining a path in which the company can continue to grow profits like Apple and turn into a multi -dollar company.

Apple Mac computers are less than ten sales of the company. Meanwhile, phones, a category they did not enter until 2007, are about half of sales. Services are about a quarter of sales.

It is more difficult than you think 🫠

Acknowledging that your best product has matured and may be on the way to limitations is difficult birth control pills for swallowing. However, as soon as you reach this awareness, it is likely that the difficult part has just started.

Those who lead the change will inevitably meet resistance, not only outside the company, but also within the company, as many employees will not be ready to give up the old way to do things.

Even assuming that you have a full purchase of the company, who knows if you are burning in the right direction? You can trade failed work for another convicted of going along with.

Of course, even the most successful companies have made many bets that have become bad. The difference between companies that cannot and what cannot overcome these failures is to manage the great risks and the confidence of the shareholders.

But if you fail enough times, you will eventually lose the belief of shareholders.

No one ever said any of this was easy.

How can investors play this 💸

Every company publicly circulated to make everything in its power to ensure that the profits will grow, perhaps in a way that leads to market revenues in the company’s share price.

But a lot of disappointment.

Unfortunately, there is no confirmed way to determine the winners constantly It is enough to be able to build a portfolio It surpasses the market.

One of the reasons for this is that over time, it is a A minority of stocks with huge returns Market performance leadership.

So, how can investors play this?

Historically, one of the best moves was to buy a wide variety of indicators like those who follow the S&P 500. While diversification may limit your upscale head, it makes almost certain that you will get exposure to the big winners, including companies that successfully mutate their business in ways to create huge amounts of shareholders value.

Fast personal note …

The development of many companies is not different from the rise and landing that many of us face in our lives.

I also recently participated with Joe Fahimi on podcastMy entry into writing about the markets was not planned and organized. And for my career, I suffered At least six discounts in the main wagesIncluding one large that occurred after layoffs.

Few of us are lucky enough to live a life as everything rises to the right in a soft and straight line.

But most of us are on a non -written path, whether by choice or because of forces outside our control.

The good news is that just because things do not go as planned, it does not mean that we are governed by the dates. Read enough CVs (and commercial status studies), and you will eventually see that it is the most impressive (and companies) who had to overcome many challenges by making major unplanned changes.

Just an idea.

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