The problem is how to separate the companies that will flame out after 5 years of hyper growth from those that will profitably reinvest their retained earnings into greater and greater dominance. That will always be the hardest part of investing.
22.05.2025 09:10 — 👍 0 🔁 0 💬 0 📌 0
This also speaks to why PE ratio in isolation is a useless valuation metric. Dying companies often have very attractive PE ratios, while companies that will produce 30+ years of compounding cash flows have very high PEs.
22.05.2025 09:10 — 👍 0 🔁 0 💬 1 📌 0
This realization has given me more sympathy for people who pay crazy prices for hot stocks. Sometimes the mania is actually justified—if they hold for 20 years and ride the compounding growth.
22.05.2025 09:10 — 👍 0 🔁 0 💬 1 📌 0
But truly outstanding companies ("compounders”, in investor-speak), generate cash for decades longer than forecasted. The difference between forecast and reality can be *massive*.
22.05.2025 09:10 — 👍 0 🔁 0 💬 1 📌 0
The reason for it comes down to the mechanics of the DCF models that analysts use to make their forecasts. These models require a fixed period over which to forecast growth, typically not longer than 10 years, with any growth after that seen as negligible.
22.05.2025 09:10 — 👍 0 🔁 0 💬 1 📌 0
After staring at hundreds of price forecast models over the past 6 months, I’ve reached what feels like a zen moment of realization: valuation models consistently undervalue many truly great companies. (Picture very much related)
#investing #compounders #asml
22.05.2025 09:10 — 👍 1 🔁 0 💬 1 📌 0
The Chadwin Investment Philosophy: Part 2 – Chadwin
In the second part of a three-part series, we’ll look at the research framework we use when evaluating a business
Running quantitative analysis of companies at scale has been possible for a long time. What's unique in the age of AI is being able to run *qualitative* analysis at scale.
www.chadwin.co/blog/our-inv...
14.05.2025 11:43 — 👍 2 🔁 1 💬 0 📌 0
I pulled these books from my shelf to help tell the story of Chadwin.
Chadwin was born from three passions: a love of great product and design, a fascination with artificial intelligence, and the desire to become an expert investor.
I’m thrilled to get it in your hands.
02.05.2025 12:39 — 👍 1 🔁 0 💬 0 📌 0
