1. As per Pobrai , Invest in simple business .

Which means invest in the

business where u can caluclate the Intrisinic value. Intrisinci value caluclation
is not so easy for Tech and fast anging businesses.
The FCF caluclated is not being used for more than 10 years OR expecting a
sale in the year to be at anything greater than 15 times cashflows at that
time (plus any ecesss capital) is because no MOAT is durable FOREVER.
2. Invest in distressed business in distressed industries. Its worth a look to
invest when PE is 3.
(Mentioned several websites and book names like Little book)
3. Invest in business with Durable Moat . Remember examples of Barber and
Chiptle .Incase of Chipotle , a few peers can replicate models but takes longer
time . But it doesnt necessraily take ways chipottle customers but pull from
the restaurents.
Always remember , the Moat is sometimes HIDDEN and great exmaple which
can work for commodities too. The oil refining business (Tesoro) has not
control on its price and rawmaterial etc. But it is in west coast which is a
MOAT because EPA regulations in california are stringent.Refining on west
coast and hawaii carries higher margins than rest of country. So most of the
time , the MOAT is HIDDEN or partially visible. So the identification of these
moats is possible by looking into financial statements.
Good Business Good Moat Ex: Barber
Balance sheet Amount of capital deployed into business
Income and Cashflow How much tey are earing of that capital
Despite of strong moats, it will decline or evade over a period of time (Ex:
Kings castle and Robberies or Only once company exists in NY exchange than
a century ago, General electric ).
4. Few bets,Big Bets and Infrequent bets. If u have a chance of Odds winning
80% for dollars 21 and 10% for 7.5 dolars and 10% for not winning at all.
Assuming 10000 dollars u have , how
much do u bet. Book : Forunes formula : William Poundstone . Its called Kellys
formula
Edge/Odds = Fraction of ur bankroll u should everytime .
(cisiova.com/betsize.asp)
5. Fixate on Arbitrage:
a. Commodity Arbitrage b. Stock arbitrage c. Merger arbitrage d. Dhandho
arbttrage
Arbitrage is Like what Gieco has or Satisfaction or money return or
barber with 17 miles arbitrage . So the question is how long the arbitrage can last
and how wider the moat is:
6.