Simple business models: They're not necessarily better at making money than complicated business models. The reason to love them: they're much easier to understand.
One exercise one can do is to try to describe a company in one sentence. If you can - and can do so compellingly - then it has passed the test.
Can you describe Google and Wal-mart each in a sentence? Google makes most of its money by selling targeted advertisements alongside its top-notch Internet search results. Wal-Mart makes money by being the low-cost retailer of an incredible variety of goods.
Both sentences clearly explain how these companies make money and what their competitive advantage is in the space. Google has the best technology; Wal-Mart has the best prices.
Those are simple business models, and you will know very quickly if either is faltering (Google ceases to have the best search capabilities or Wal-Mart ceases to have the best prices).
On the other hand, if the business is complicated and unclear, you likely won't enjoy following it.
Keep INVESTING Simple and Safe (KISS) ****Investment Philosophy, Strategy and various Valuation Methods**** The same forces that bring risk into investing in the stock market also make possible the large gains many investors enjoy. It’s true that the fluctuations in the market make for losses as well as gains but if you have a proven strategy and stick with it over the long term you will be a winner!****Warren Buffett: Rule No. 1 - Never lose money. Rule No. 2 - Never forget Rule No. 1.
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Description of a company in one sentence is ability. A great knowledge and hard work is required to make a business faultless and well-known.
VCT
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