Investment Journal

Basic Examples -

1. Business must offer a product or service for which the demand must grow with time. Ex. Colgate vs HP.

2. Business must produce a good quality non-durable goods or service.
   • Rapidity of Turnover: - The number of times the stock of goods is sold and restocked during a period of time.
   • Durable goods :
     • Short lived
     • TV, Car …
     • Low rapidity
   • Non-Durable goods :
     • Long Lived
     • Medicines, Chocolate and food
     • High rapidity
   • High Rapidity leads to consistent growth inb sells, profits and stock price. Ex. - LG (fluctuating) vs Coca Cola(consistent)
3. Business must be durable competitive and have an economic moat.
   • Durable Competitive Businesses:
     • Purchased based on the quality rather than price.
     • Low sensitivity to price.
     • Ex. Cadbury
   • Price Competitive Businesses:
     • Purchase based on the price, delas etc.
     • Ex. - Jet Airways
   • Economic Moat:
     • Company’s ability to maintain durable competitive advantage by well-known brand, large market share, and pricing power. Ex.:
       • Beverages: Coca-Cola
       • Baby care: Johnson & Johnson
       • Oral care: Colgate
       • Entertainment: Walt Disney
     • Can maintain profit margins in any financial situation
     • $inflation \propto price$ OR $inflation \propto 1/quatity$

   ### Classification of Business Types and Investment Preferences

   Investment Category	Examples	Preference Level
   Most Preferred
   Durable competitive + economic moat	Colgate, Visa	Top choice
   Non-durable goods + economic moat	Coca-Cola, Britannia	Top choice
   Next in Line
   Durable competitive without economic moat	Abbott Labs, Johnson & Johnson	Moderate preference
   Price competitive with economic moat	Hindustan Zinc	Moderate preference
   Durable goods + economic moat	Nike, Eicher Motors	Moderate preference
   Bad Investments
   Price competitive without economic moat	Jet Airways, Alok	Avoid
   Durable goods without economic moat	LG, HP	Avoid

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