Beyond the Numbers: The "Invisible" Factors of a Great Stock

The Jockey, Not Just the Horse

In horse racing, you bet on the horse, but you also check who the jockey is. In business, the "jockey" is the Management Team.

• Integrity: Does the CEO have a clean track record? Do they treat minority shareholders (like you) fairly?

• Vision: Does the leadership have a clear plan for the next 5 or 10 years, or are they just reacting to whatever happens today?

The Mentor’s Tip: Watch an interview with the CEO. Do they explain things simply, or do they hide behind complicated words? Great leaders are usually great teachers.

The Power of the Brand (Mindshare)

Why do people pay 4x more for a branded coffee than a local one? That is Brand Power.

• A strong brand is a "Moat" (which we touched on in Day 9). It allows a company to raise prices without losing customers.

• If a company can raise prices during inflation and people still keep buying, you’ve found a very high-quality business.

Corporate Governance (The "Guardrails")

This sounds like a big word, but it just means: Is the company being run honestly?

• Are the board of directors independent, or are they all just friends of the owner?

• Are the accounts audited by a reputable firm?

• A company with amazing profits but poor governance is a ticking time bomb.