水不恋云    复制

204-Start Thinking Like an Analyst
  Course 204:
  Start Thinking Like an Analyst
  Investing is far more than just learning basic accounting and crunching
  numbers; it is also about observing the world around us. It is about
  recognizing trends and what those trends will ultimately mean in terms of
  dollars.
  
  Thinking like an analyst can help because it can provide some organized ways
  in which to observe the world. We all have analytical skills, but the degree
  to which these skills are developed depends on the individual. Honing your
  analytical skills can help you organize some of the information that
  overwhelms you each day.
  
  For example, it's hard not to notice how fast food restaurants are all located
  near one another. Maybe this is an obvious question, but why is that? Clearly
  those restaurants located at the only exit for 50 miles in the middle of
  Kansas don't have much choice, and certainly business and residential zoning
  regulations dictate locations to some extent. But why do all of the
  quick-service restaurants locate near one another when alternatives are
  available? After all, what good does it do for some of these restaurants to be
  located in clusters? What happens to McDonald's MCD if Wendy's WEN is right
  next door?
  
  
  Four Basic Questions
  The answers to these questions for restaurants, or for any business, can be
  found by asking four very general questions to kick-start the analyst thought
  process:
  
  1. What is the goal of the business?
  2. How does the business make money?
  3. How well is the business actually doing?
  4. How well is the business positioned relative to its competitors?
  
  Once you start thinking in these terms, and sharpen your observational skills,
  you'll be well on your way to thinking like an analyst, constantly on the hunt
  for investment opportunities.
  
  The goal of restaurants, for example, is to feed customers. This seems pretty
  straightforward--although some restaurants have also tried to combine meals
  with entertainment to mixed success--but don't just assume a business's
  purpose is obvious. Be sure you have a good idea of what it's really trying to
  achieve. Then ask if it makes sense for this business to try to achieve this
  objective. Does it make sense for a restaurant to also entertain customers,
  for example?
  
  Once you have a good idea of what the business is trying to do, think about
  how it makes money. In our restaurant example, how much does the food in the
  restaurant actually cost? Can the restaurant charge more for its food because
  of a pleasant ambiance or because it is providing entertainment? Is the
  restaurant trying to sell a lot of meals at a low price, or is it attempting
  to sell fewer meals but at a much higher profit per meal?
  
  Then ask yourself, "How well is the business doing?" Don't worry about picking
  up any financial statements just yet; rather, focus on observing what you can
  about the business. Back to our restaurant example, think about where you
  choose to eat and why. Has your favorite place been around a long time? Are
  there lots of locations for your favorite restaurant? Are they busy, with
  people in line or in the parking lot? Are they in good locations? Do they seem
  to get a lot of repeat business? Do they seem to have a better caliber of wait
  staff? How fancy are the interiors? As a potential investor in this or similar
  businesses, all this stuff counts.
  
  If you think you have a pretty good understanding of the business's
  performance, at least as an observer, spend some time thinking about how well
  it functions in its industry. In other words, assess the competition.
  
  Is there a lot of competition in its industry? With restaurants, there
  certainly seem to be a lot of choices, but what about an entirely different
  industry, like computers? Are there as many types of computer companies as
  there are restaurants? Not by a long shot. Does that mean that the computer
  industry isn't as competitive as the restaurant industry? Not necessarily.
  Instead it might mean that competition functions very differently. Since it
  takes a ton of capital to start up a computer company, and not so much to
  start up a restaurant, maybe there is more risk in computer manufacturing?
  Maybe finding new products is also more difficult? Maybe one of the only ways
  to compete in the industry is on price? Asking these kinds of questions can
  give you a good idea of how well a specific business is positioned to cope
  with the challenges it may encounter.
  
  At this point it may seem like we're going a little nuts generating questions,
  but thinking like an analyst involves observing the business world and asking
  questions to understand how it works. Thankfully, there are also experts who
  have done a lot of this thinking already, and many of them have developed
  useful frameworks to help organize our thinking even more.
  
  If we think back on the four questions we mentioned earlier, we should be able
  to get a good handle on a business's goals and on its performance just by
  reading about it and studying its financial statements. It's really the last
  question, the one in which we consider how well a company is positioned
  relative to its competitors, where we might need some more help.
  
  
  Finding a Framework: Moats
  It's a bit strange to think that an image typically associated with England
  and the Middle Ages might offer a framework for stock analysis. As we've
  already seen, in order to really think like an analyst, it's important to
  consider factors beyond just the numbers. After all, our quest is to find
  exceptional companies delivering outstanding performance, in which case we may
  need to put forth extra effort to find that "Holy Grail."
  
  One helpful concept is that of an "economic moat." And while you may not hear
  it used as often as terms such as P/E ratio or operating profit, the concept
  of an economic moat is a guiding principle in Morningstar's stock analysis and
  valuation. Eventually the idea may gain more of a following since we think it
  is the foundation for identifying companies that create shareholder value over
  the long term. In the meantime, we'll just consider ourselves lucky to have a
  framework that can separate really great companies from the merely good ones.
  
  
  What Is an Economic Moat?
  Quite simply, an economic moat is a long-term competitive advantage that
  allows a company to earn oversized profits over time. The term was coined by
  one of our favorite investors of all time, Warren Buffet, who realized that
  companies that reward investors over the long term have a durable competitive
  advantage. Assessing that advantage involves understanding what kind of
  defense, or competitive barrier, the company has been able to build for itself
  in its industry.
  
  Moats are important from an investment perspective because any time a company
  develops a useful product or service, it isn't long before other firms try to
  capitalize on that opportunity by producing a similar--if not better--product.
  Basic economic theory says that in a perfectly competitive market, rivals will
  eventually eat up any excess profits earned by a successful business. In other
  words, competition makes it difficult for most firms to generate strong growth
  and profits over an extended period of time since any advantage is always at
  risk of imitation.
  
  The strength and sustainability of a company's economic moat will determine
  whether the firm will be able to prevent a competitor from taking business
  away or eroding its earnings. In our view, companies with wide economic moats
  are best positioned to keep competitors at bay over the long term, but we also
  use the terms "narrow" and "none" to describe a company's moat. We don't often
  talk about the depth of a moat, yet it's a good way of thinking about how much
  money a company can make with its advantage.
  
  To determine whether or not a company has an economic moat, follow these four
  steps:
  
  1. Evaluate the firm's historical profitability. Has the firm been able to
  generate a solid return on its assets and on shareholder equity? This is
  probably the most important component to identifying whether or not a company
  has a moat. While much about assessing a moat is qualitative, the bedrock of
  analyzing a company still relies on solid financial metrics.
  
  2. Assuming that the firm has solid returns on its capital and is consistently
  profitable, try to identify the source of those profits. Is the source an
  advantage that only this company has, or is it one that other companies can
  easily imitate? The harder it is for a rival to imitate an advantage, the more
  likely the company has a barrier in its industry and a source of economic
  profit.
  
  3. Estimate how long the company will be able to keep competitors at bay.
  We refer to this time period as the company's competitive advantage period,
  and it can be as short as several months or as long as several decades. The
  longer the competitive advantage period, the wider the economic moat.
  
  4. Think about the industry's competitive structure. Does it have many
  profitable firms or is it hypercompetitive with only a few companies
  scrounging for the last dollar? Highly competitive industries will likely
  offer less attractive profit growth over the long haul.
  
  
  
  Types of Economic Moats
  After researching hundreds of companies, we've identified four main types of
  economic moats.
  
  Low-Cost Producer. Companies that can deliver their goods or services at a low
  cost, typically due to economies of scale, have a distinct competitive
  advantage because they can undercut their rivals on price.
  
  Wal-Mart WMT is a great example of a low-cost producer, and its low costs
  allow it to price its products the most attractively. As a dominant player in
  retailing, the company's size provides it with enormous scale efficiencies, or
  operating leverage, that it uses to keep costs low. Scale allows Wal-Mart to
  do its own purchasing more efficiently since it has roughly 5,000 large stores
  worldwide, and it gives the company tremendous bargaining power with its
  suppliers. Since the company positions itself as a low-cost retailer, it wants
  to ensure it gives the lowest prices to its customers. This can translate into
  tough bargaining terms for those firms that want to sell their products on
  Wal-Mart's shelves. As a result, Wal-Mart is able to offer prices that
  competitors have a difficult time matching--one reason why you don't see too
  many Kmarts around anymore.
  
  High Switching Costs. Switching costs are those one-time inconveniences or
  expenses a customer incurs in order to switch over from one product to
  another. If you've ever taken the time to move all of your account information
  from one bank to another, you know what a hassle it can be--so there would
  have to be a really good reason, like a package deal on an account and
  mortgage for example, for you to consider switching again.
  
  Companies aim to create high switching costs in order to "lock in" customers.
  The more customers are locked in, the more likely a company can pass along
  added costs to them without risking customer loss to a competitor.
  
  Surgeons encounter these switching costs when they train to do procedures
  using specific medical devices, such as the artificial joint products from
  medical-device companies Biomet BMET or Stryker SYK. After training to learn
  to use a specific product, switching to another would require the surgeon to
  forgo comfort and familiarity--and what patient, much less surgeon, would want
  that? Additionally, because the surgeon would have to be trained to use a new,
  competing product, he or she would also have to contend with lost time and
  money resulting from not performing as many surgical procedures. Clearly, with
  certain products and services, the switching costs can be quite high.
  
  The Network Effect. The network effect is one of the most powerful competitive
  advantages, and it is also one of the easiest to spot. The network effect
  occurs when the value of a particular good or service increases for both new
  and existing users as more people use that good or service.
  
  For example, the fact that there are literally millions of people using eBay
  makes the company's service incredibly valuable and all but impossible for
  another company to duplicate. For anyone wanting to sell something online via
  an auction, eBay EBAY provides the most potential buyers and is the most
  attractive. Meanwhile, for buyers, eBay has the widest selection. This
  advantage feeds on itself, and eBay's strength only increases as more users
  sign on.
  
  Intangible Assets. Some companies have an advantage over competitors because
  of unique nonphysical, or "intangible," assets. Intangibles are things such as
  intellectual property rights (patents, trademarks, and copyrights), government
  approvals, brand names, a unique company culture, or a geographic advantage.
  
  In some cases, whole industries derive huge benefits from intangible assets.
  Consumer-products manufacturers are one example. They build profits on the
  power of brands to distinguish their products. Well-known PepsiCo PEP is a
  leader in salty snacks and sports drinks, and the firm boasts a lineup of
  strong brands, innovative products, and an impressive distribution network.
  The company's investment in advertising and marketing distinguishes its
  products on store shelves and allows PepsiCo to command premium prices.
  Consumers will pay more for a bag of Frito-Lay chips than for a bag of generic
  chips. As the value of a brand increases, the manufacturer is also often able
  to be more demanding in its distribution relationships. To a large degree,
  brand power creates demand for those chips and secures their placement on
  store shelves.
  
  One final thought about economic moats: It is possible for some companies to
  have more than one type of moat. For example, many companies that use the
  network effect also benefit from economies of scale, because these companies
  tend to grow so large that they dwarf smaller competitors. In general, the
  more types of economic moat a company has--and the wider those moats are--the
  better.
  
  
  The Bottom Line
  Successful long-term investing involves more than just identifying solid
  businesses, or finding businesses that are growing rapidly, or buying cheap
  stocks. We believe that successful investing also involves evaluating whether
  a business will stand the test of time.
  
  Moats are a useful framework to help answer this question. Identifying a moat
  will take a little more effort than looking up a few numbers, but we think
  understanding a company's competitive position is an important process for
  determining its long-term profitability. And as we stated earlier in this
  book, how well a company's stock performs is directly related to the profits
  the firm can generate over the long haul.