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4 the long term

A podcast I was listening to this weekend had something very interesting on investing.

The investment expert was asked how he manages to beat the market, to stay ahead of the curve, and deliver superior performance for his portfolio. The approach he articulated was so clear and simple, yet so profound. He said he makes investments into companies, only when he is convinced that his (data-backed) expectations of one of 4 things is better than the rest of the market’s expectations.

  1. The magnitude of cash flows that will be earned by the company
  2. The duration of cash flows that will be earned by the company
  3. The quality of cash flows that will be earned by the company
  4. The use of cash flows that will be earned by the company

It got me thinking that this can be applied to many choices in life. Not ‘cash flows’ per se, but whatever we expect the perceived return to be.

Like if we are unsure of a career choice or a degree choice. Don’t choose computer science (just an example) because everyone else is choosing it. Figure out whether the magnitude (impact) of that education for you will be relevant? For how long, i.e. what duration is it just a passing fad, and you internally despise the subject? What is the quality of this degree in what you want in your life? How can I use it to get what I want?

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