Have you ever seen a product and thought, “This won’t be around very long?”
Congratulations, you’ve used a mental model!
The Product Life Cycle model, to be exact.
This suggests that products go through different stages: introduction, growth, maturity, and decline.
 Source: Investopedia.com |
Charlie Munger was big on having hundreds of mental models to apply to his investment decision-making.
I’ve been slowly working through Poor Charlie’s Almanack, and I finally realized what he means when he says he can’t give a formulaic approach to intrinsic business value.
Any financial asset’s intrinsic value is the cash it’ll produce between now and judgment day, discounted back by the appropriate rate.
It’s not a scientific number; it’s fuzzy to calculate, but an intrinsic number exists.
So, Charlie can’t give a formulaic approach to intrinsic value because he doesn’t use one.
He mixes in many mental models, and if the gap between value and price is unattractive, he goes on to something else.
That got me thinking about the importance of a company’s management team and how much we trust them to make good decisions.
We know that the world is constantly changing, and the forces of creative destruction are always attacking a business’s competitive advantage.
Unknowns will pop up, and how a management team reacts will affect future cash flows.
So, how does one quantify the unknown in future cash flow projections?
So, we have to factor in how management will react and adapt to change to benefit the long-term survival of the business and its shareholders.
Management performance will affect the intrinsic business value.
And because nobody knows what tomorrow holds, investing is so interesting and scary.
Do you want to know more about mental models and how to use them to eliminate blind spots?
Check out this post from Farnam Street on 100 mental models explained.
And I’d love to know if you intentionally apply any mental models to your investment process by hitting reply.
😁Special THANK YOU to the (7) people who responded to the last newsletter!!
Check out the portfolios and podcasts, or see what’s cooking on YouTube.
That said, let’s get to this week’s moves.
Dividends Received This Week ~$139.09
- Main Street Capital (MAIN)| $45.00
- Schwab US Di. ETF (SCHD) | $94.09
Dividends Received Year to Date~
$1,632.26
Stocks Bought (AVERAGE)
- 1 Agree Realty (ADC) | $57.15
- 10 Harrow Health (HROW) | $12.60
Notable Ex-Dividends This Week + SSD Score
- 4/2 Comcast (CMCSA), 2.86% | 89VS
- 4/3 Cisco (CSCO), 3.21% | 91VS
- 4/4 JPMorgan (JPM), 2.30% | 60BS
- 4/4 Bristol-Myers Sq. (BMY), 4.43% | 70S
- 4/5 McCormick & Co. (MKC), 2.19% | 80S
In case you missed it, here are four CHEAP dividend stocks you’ll love.
🎙️Podcasts You Should Check Out!🎙️
🤑 Dan Davidowitz of Polen Capital was on the Compound & friends and shared some things they look for when buying a stock.
🎧 Mike the Dividend Guy shared his thoughts and personal experience about buying when things are at all-time highs. This was a great listen!
Investing Newsletters You Might Like
⭐Ryne Williams writes a free weekly dividend newsletter and creates multiple top-notch YouTube videos every week.
🤑Rick Stambaugh from Orange Mountain Financial brings you ‘Grow Retirement Income‘. He’s a seasoned pro with over 30 years in trading and a passion for guiding folks to a prosperous retirement.
🌸 Seeking Alpha SPRING SALE!🌷
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Random music video I enjoy and you might too!
🎵Pantera – Cemetery Gates”🎵
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That said, have a WONDERFUL week, and I’ll see you in the next one.
