Charlie Munger's wisdom on crisis was profound.

The big money is not in the buying and selling, but in the waiting

Charlie Munger:   Own things you understand. Maintain adequate liquidity and let compounding do the heavy lifting.

Charlie Munger's wisdom on crisis was profound. "The big money is not in the buying and selling, but in the waiting" What he meant is patience is the investor's greatest asset. You wait for the right pitch. You wait for a crisis when prices are attractive, then you swing hard. Charlie also believed that most of what passes for sophisticated investing is actually just sophisticated gambling. He had no patience for complexity, for trading, for trying to be clever. He believed in buying wonderful businesses at fair prices and holding them forever. During crisis, Charlie would remind Buffett to think about what the business will look like in 10 years, not what the stock price will do tomorrow. He'd say, "If you are not willing to own it for 10 years, don't own it for 10 minutes."

Focus on business fundamentals rather than market gyrations

That perspective kept them focused on business fundamentals rather than market gyrations. Charlie Munger also understood the value of inversion. Instead of asking how do I succeed, he'd ask how do I fail? Then, he systematically avoid those failure modes. For crisis the failure modes are obvious. Using leverage, panicking and selling at the bottom, speculating rather than investing, trying to time things perfectly. Avoid those mistakes and you will do just fine.

Never interrupt your compounding unnecessarily

One more thing Charlie taught Buffett. The first rule of compounding is to never interrupt it unnecessarily. Every time you sell during a panic, every time you switch strategies, every time you try to get clever, you interrupt your compounding. The people who get wealthy are the ones who set up a sensible strategy and then stick to it through multiple market cycles.



After you build your first million ....

If you build your first million, congratulations, you have done something many have never achieved. You have developed the discipline, the temperament, and the knowledge that separates successful investors from everyone else. Now your opportunity is to accelerate your journey to your second million by capitalizing on crisis. And, crisis will come. They always do. The question is whether you'll be prepared to take advantage or whether you'll panic like everyone else.

Take advantage of crisis

The 3 strategies shared by Buffett:

• Buying wonderful companies at crisis prices
• Upgrading your portfolio during dislocations
• Building cash before the storm to deploy during the panic.

These are not complicated, but they require discipline, patience, and courage. They require discipline to build cash during the good times when it feels like you're missing out. They require patience to wait for the right opportunities rather than chasing everything that moves, and they require courage to act when everyone else is paralyzed by fear.

If you can do these things, if you can stay rational while others panic, if you can see crises as opportunities rather than disasters, you can build your second million much faster than you built your first.


Crises accelerate the transfer of money from the impatient to the patient by the stock market

Remember, the stock market is a device for transferring money from the impatient to the patient. Crises accelerate this transfer. The impatient panic and sell at the bottom. The patients stay calm and buy at the bottom. Over time, this difference compounds into enormous wealth. The next crisis is your opportunity. Prepare now, by building cash.

Volatility is not risk. Risk is the permanent loss of capital.

Volatility is not risk. Risk is the permanent loss of capital. 

When market drops 20%, that is volatility, not risk. The risk only materializes if you sell at the bottom and lock in the loss.

If you hold good companies through the volatility, you'll be fine. In fact, volatility creates opportunity for those with emotional control to buy at lower prices. Never worry about volatility.

The real risk in investing is not in volatility. 

• It is buying a bad business at any price. 
• It is overpaying even for a good business. 
• It is using borrowed money that you might need to repay at the worst possible time. 
• It is letting fear or greed make your decisions for you.

Focus on what you can control. 

What you can't control

• You can't control whether the market goes up or down tomorrow. 
• You can't control whether we enter a recession next year. 
• You can't control what other investors do, but you can control several critical things. 

What you can control

• You can control which companies you invest in.  Choose businesses you understand.  With strong competitive advantages, run by honest and capable management, selling at reasonable prices. 
• You can control how much you pay. Never overpay, even for a great business. 
• You can control your time horizon. Give your investments time to compound. 
• You can control your emotions. This is the hardest and most important thing you can control. When you focus on what you can control, you worry less about what you can't. 

The market will do what it does. Your job is to make smart decisions and stick with them.

Keep a journal of your investment decisions. 

Write down why you are buying a stock, what price you are paying, what you expect the business to do over the next 5 to 10 years. Then periodically review your journal. 

This practice does several things. 

• First, it forces you to think clearly about your decisions before making them. You can't write I am buying because everyone says it is going up. You have to articulate a real investment thesis. 
• When you look back at your decisions, you'll see patterns. Maybe you always buy when you are feeling euphoric and the market is high. Maybe you always sell when you are scared and the market is low. Recognizing these patterns is the first step to changing them. 
• Third, it helps you learn from both successes and failures. When an investment works out, you can look back and see what you got right. When it doesn't, you can see what you missed. Over time, you'll become a better investor by learning from your own experience.

How to find good growth stocks?

Finding good growth stocks is a blend of art and science. It involves identifying companies that are not just growing, but growing at an accelerating pace and are positioned to do so for the foreseeable future.

Here is a comprehensive guide, broken down into a philosophical framework, a practical checklist, and the tools to get started.

The Core Mindset: What is a "Growth Stock"?

First, understand what you're looking for. A growth stock is a share in a company whose earnings or revenue are expected to grow at a significantly faster rate than the market average. These companies often reinvest their profits back into the business (so they may not pay dividends) and are typically in expanding industries.

Key Principle: You are betting on the future potential of the company, not just its current value.

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The Step-by-Step Process to Find and Evaluate Growth Stocks

Think of this as a funnel: you start with a broad universe of ideas and then apply increasingly strict filters to find your best candidates.

Step 1: Idea Generation - Where to Look

You need a starting point. Here are the best places to find promising companies:

1. Your Own Experiences: What products and services are you and your friends obsessed with? Are you using a new software at work that's a game-changer? Is there a brand your children must have? (This is how many people found Apple, Netflix, and Amazon early on).

2. Industry Trends and Megatrends: Identify powerful, long-term shifts in the economy and society.

   • Artificial Intelligence (AI) & Automation

   • Cloud Computing

   • Digital Payments & FinTech

   • Electric Vehicles (EVs) & Clean Energy

   • Genomics and Biotechnology

   • Cybersecurity

3. Screening Tools: Use stock screeners to mechanically find companies meeting specific growth criteria. (See "Essential Tools" section below).

4. Expert Analysis & News: Read reputable financial news (Bloomberg, Reuters, The Wall Street Journal) and follow insightful investors and analysts. Don't take their word as gospel, but use them for ideas.

Step 2: The Quantitative Checklist - The Numbers

Once you have a candidate, dig into the financials. These are the non-negotiable metrics for a growth company.

Step 3: The Qualitative Checklist - The Story

The numbers tell you what is happening; the qualitative analysis tells you why and if it can continue.

1. Durable Competitive Advantage (The "Moat"): What prevents competitors from stealing their customers?

   • Network Effect: The service becomes more valuable as more people use it (e.g., Visa, Facebook, Uber).

   • Brand Power: A trusted, must-have brand that allows for premium pricing (e.g., Apple, Nike).

   • Cost Advantage: Can produce goods or services cheaper than anyone else (e.g., Amazon in retail, Costco).

   • Intellectual Property: Patents, trademarks, and regulatory licenses that block competition (e.g., pharmaceutical companies, sophisticated software).

2. Total Addressable Market (TAM): Is the company operating in a large and growing market? A company with a great product in a small niche will eventually run out of room to grow.

3. Strong Management: Look for a founder-led or visionary leadership team with a clear long-term vision and a track record of execution. Read shareholder letters and listen to earnings calls.

4. Scalable Business Model: Can the company grow revenue much faster than its costs? Software is the classic example—it costs very little to duplicate and sell a software program for the millionth time.

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Essential Tools for Your Research

• Stock Screeners: Finviz, Yahoo Finance, TradingView. Use them to filter for stocks with, for example, "Sales Growth YoY > 25%"

• Financial Data: Yahoo Finance (user-friendly), Bloomberg Terminal (professional), Morningstar (in-depth analysis).

• Company Communications: Listen to quarterly earnings calls (found on investor relations pages). Read the annual report (10-K) and quarterly report (10-Q) filed with the SEC.

Common Pitfalls to Avoid

• Chasing Past Performance: A stock that went up 500% last year isn't necessarily a good buy today. Focus on the future growth potential.

• Ignoring Valuation: Even the best company can be a bad investment if you pay too much for it. A high P/E ratio requires even higher growth to justify it.

• Confusing a Good Product with a Good Business: A product can be revolutionary, but if the company can't monetize it effectively, it's not a good stock.

• Lack of Patience: Growth investing requires a long-term horizon (5+ years). Volatility is normal. If you believe in your research, hold through the ups and downs.

A Practical Example: How You Might Have Spotted NVIDIA Early in the AI Boom (Circa 2016-2018)

1. Idea Generation: You read about the rise of AI, machine learning, and data centers. You identify that all these fields require immense processing power.

2. Qualitative Check: You research and find that NVIDIA's GPUs are uniquely suited for this task, not just for gaming. They have a huge moat (dominant market share, complex IP) and a massive TAM (AI, cloud, autonomous vehicles). Management is focused on this shift.

3. Quantitative Check: You look at the numbers. Revenue from the Data Center segment is exploding (e.g., growing 50%+ YoY). Gross margins are high and stable. Earnings are following suit. The PEG ratio, while not cheap, is justified by the incredible growth rate.

4. Decision: You conclude that NVIDIA is not just a chip company but a foundational pick for the AI megatrend and decide to invest.

Final Word

Finding good growth stocks is a skill that takes time and practice. It requires diligent research, a healthy skepticism, and the emotional fortitude to think long-term.

Start by paper trading: Build a mock portfolio and track your picks for 6 months. See how your research holds up before committing real capital.

Disclaimer: This information is for educational purposes only and does not constitute financial advice. All investing involves risk, including the possible loss of principal.

United Plantation (2089) is an great plantation company. Everyone knows that.

Based on the financial data and the teachings of Warren Buffett, United Plantations Berhad is not just a good company, but it exhibits many of the characteristics of a great company.

Let's analyze it using the Buffett's framework of "Great, Good, and Gruesome" companies.

The "Gruesome" Company

A "gruesome" company is one that:

• Has low and inconsistent profit margins.

• Earns a poor return on equity (ROE).

• Requires constant heavy capital investment to stay afloat (low free cash flow).

• Operates in a highly competitive industry with no moat, leading to poor pricing power.

Verdict for United Plantations: NOT Gruesome. The data is the complete opposite of this description.

The "Good" Company

A "good" company is one that is often mistaken for a great one. It's characterized by:

• Rapid Growth in a "Hot" Industry: The stock is often popular and in the news.

• High Price: Because it's popular, it typically sells at a very high Price-to-Earnings (P/E) ratio.

• Volatile Performance: Its success is often tied to the overall industry cycle. In the commodity sector, a "good" company does well when prices are high but struggles when they fall.

Verdict for United Plantations: More than just "Good". While it is in a commodity (palm oil) industry, which is cyclical, its financial performance shows a resilience and quality that transcends a typical cyclical "good" company.

The "Great" Company

This is the type of company Buffett seeks. It has a durable competitive advantage or a wide "economic moat." Key characteristics include:

• Consistently High Profit Margins: The company has pricing power and cost control.

• Consistently High Return on Equity (ROE): The company generates high profits without needing to constantly reinvest massive amounts of capital. It can fund growth from its own earnings.

• Strong Free Cash Flow: The business is a cash machine.

• Understandable Business: It operates a simple, predictable business model.

• Long-Term Outlook: Management retains earnings to reinvest at high rates of return, compounding value for shareholders.

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Analysis: Why United Plantations is a Great Company

Based on the TTM data we calculated, United Plantations scores exceptionally well on the key metrics for a "great" company:

1. Consistently High and Expanding Profit Margins:

• Its TTM Net Profit Margin has not only been high but has expanded from around 27% in 2014 to over 35% recently.

• This is a classic sign of a durable competitive advantage. It means the company can command premium prices for its products, control its costs superbly, or both. In a commodity business, this is rare and indicates extreme operational efficiency and a possible focus on higher-margin products like specialty fats.

2. Extraordinarily High Return on Equity (ROE):

• As we calculated, the ROE (using TTM EPS / NTA) is phenomenally high, often exceeding 200-250% in recent years.

• While our specific calculation is influenced by the low carrying value of its assets (land), it unequivocally shows that the company is generating enormous profits relative to its accounting book value. This is the definition of a high-ROE business that Buffett cherishes. It can compound shareholder value at a very high rate.

3. Strong and Growing Earnings (The Cash Machine):

• The CAGR for TTM Net Profit was 9.19% over 11.5 years, outperforming its revenue growth. This shows the earnings power is not just growing, but becoming more efficient.

• The company has a long history of profitability through various cycles, demonstrating resilience.

4. Durable Competitive Advantage (The Moat):

• Efficiency Moat: In a commodity business, the low-cost producer wins. United Plantations' ability to maintain and expand its profit margins while others struggle is a clear sign of a massive efficiency moat. They can produce palm oil more cheaply and effectively than competitors.

• Reputation & Quality Moat: Their consistent performance suggests a focus on quality and reliability that builds long-term customer relationships.

The One Caveat (The "Good" Company Trap)

The only factor that prevents it from being a perfect, no-doubt-about-it "great" company like See's Candies is its industry.

• It is still a commodity company. Its fortunes are somewhat tied to the global price of crude palm oil (CPO). While its margins show it handles downturns better than most, a severe and prolonged crash in CPO prices would still impact its earnings.

However, its performance within that cyclical industry is what makes it great. It's not just a fair-weather company; it's an exceptionally well-run business that has built a wide moat through operational excellence.

Conclusion

United Plantations is a Great Company.

It possesses the key financial hallmarks Buffett looks for: high and expanding profit margins, an enormous return on equity, and a demonstrated ability to grow earnings consistently over the long term. It has a clear and durable competitive advantage as a low-cost, highly efficient producer in its industry.

While an investor must always be mindful of the commodity price cycle, United Plantations has proven itself to be among the highest quality operators in the sector, worthy of the "great" designation.

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Analysis and Interpretation

The CAGRs reveal a very strong and high-quality financial performance from United Plantations over the 11.5-year period:

1. Profitability Growth Outpacing Revenue: The company achieved a Net Profit CAGR of 9.19%, which is significantly higher than its Revenue CAGR of 6.22%. This indicates an impressive expansion in profit margins over the long term. The company has become more efficient at converting revenue into actual profit, likely through cost control, operational efficiencies, or a more favorable product mix.

2. Consistent Tax Rate: The fact that the PBT (Profit Before Tax) and Net Profit CAGRs are identical (9.19%) suggests that the company's effective tax rate has remained very consistent throughout this period, which adds predictability to its earnings.

3. Overall Performance: A near-double-digit annualized growth rate in earnings over more than a decade is a hallmark of a well-managed and fundamentally strong company, especially in a commodity-based industry like plantations.

Key Observations:

1. Exceptional Profitability: The TTM Net Profit Margins are exceptionally high, consistently staying above 24% for most of the last decade and recently reaching an impressive 36%. This is a hallmark of a highly efficient and profitable company.

2. Margin Expansion: There is a clear trend of margin expansion over the long term. Comparing the earlier periods (e.g., ~27-30% Net Profit Margin around 2014-2015) to the recent quarters (consistently above 35%) shows significant operational improvement and pricing power.

3. Extremely High ROE: The Return on Equity (ROE) figures are extraordinarily high. It is crucial to understand the reason:

   • The formula used (EPS/NTA) gives a Price-to-Book ratio equivalent, not a standard ROE. A standard ROE is Net Profit / Shareholders' Equity.

   • The calculated values (e.g., 273%) are possible but indicate that the company is generating profits many times its book value. This often happens when the market value (or the economic value) of its assets (like plantation land) is far higher than the historical cost recorded as NTA on the balance sheet.

   • The massive jump in ROE from 2020 onwards coincides with the capital change (share split) that significantly reduced the adjusted NTA per share, amplifying this ratio. This confirms that the company's assets are carried at a cost that is much lower than their true earning potential.

In summary, these metrics paint a picture of a company with world-class profitability and phenomenal returns on its accounting equity, driven by highly valuable assets and superb operational execution.

Dividend Payout Ratio (Based on Q4 TTM EPS)

Key Observations and Interpretation:

The DPO ratio tells a very clear story about United Plantations' dividend policy and financial performance over two distinct periods.

1. The High Payout Era (2015-2019):

• During this period, the DPO ratio was consistently over 125%, even reaching nearly 200% in 2019.

• A DPO over 100% means the company was paying out more in dividends than it earned in net profit for that year. This is often unsustainable for most companies.

• Interpretation: This indicates that United Plantations was using its strong cash reserves (retained earnings from previous years) to fund dividends. This is a classic sign of a mature, cash-rich company with limited major reinvestment opportunities, choosing to return excess capital directly to shareholders. It signals a very shareholder-friendly management.

2. The Sustainable Payout Era (2020-Present):

• Starting in 2020, there is a dramatic and consistent shift. The DPO ratio normalized to a band between 77% and 89%, with the exception of 2023.

• A DPO in the 70-90% range is still very high but is generally sustainable as long as earnings are stable. It indicates the company is paying out most of its annual earnings as dividends.

• Interpretation: This shift likely coincides with the capital restructuring (share split). The company may have decided to re-base its dividend policy to a high but more sustainable level linked directly to current-year earnings, rather than drawing down on past reserves.

• The 2023 Anomaly: The 111.4% DPO in 2023 shows that the company was willing to pay a special "bonus" after an exceptionally profitable year (as seen in our TTM analysis), slightly exceeding that year's earnings.

Overall Conclusion:

United Plantations has transitioned from a policy of returning large, excess capital reserves to a policy of sustaining a very high, earnings-based payout. The current ~80% payout ratio is a clear commitment to shareholders, demonstrating that the company prioritizes returning profits while still retaining a portion for reinvestment and stability. This is the mark of a highly profitable company with a generous and thoughtful dividend policy.

Chart of 21.11.2025

In the long run, the stock market is a weighing machine.

It is better to buy a wonderful company at a fair price than a fair company at a wonderful price. (Warren Buffett)