Compounding Quality

@QCompounding

5 Tweets • 2022-10-12 •  See on Twitter

rattibha.com 

5 Things I wish I knew about the stock market 20

years ago.

The impact of taxes on compounding

Costs and taxes hurt your investment results. Try to

postpone paying taxes as long as possible.
 The power of big tech

Today, Apple’s market cap is equal to the sum of the

bottom 180 companies within the S&P 500.

Don’t focus solely on big tech. Small cap stocks

outperform the market in the long term.
 Don’t use debt to buy stocks

Every debt is ultimately paid, if not by the debtor, then

eventually by the creditor." - James Grant
 Inflation harms your wealth

The best way to protect yourself against inflation is

buying quality stocks with high gross margins.

Warren Buffett summarizes it beautifully here:

 Example of a Quality Company

Automatic Data Processing is a global provider of

business outsourcing solutions (human resource,
payroll, taxes, …).

The company has a free cash flow margin of 17.7%

and should be able to grow its FCF with 15% per year
until 2025.

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