Warren Buffett once said: "The ideal business is one that earns very high returns on capital and that keeps using lots of capital at those high returns. That becomes a compounding machine.” And luckily for us, we can learn to find these. Let's break it down:

Price to earnings tells you nothing about the value you are getting You can't compare Fords to Ferraris Instead, look for: •ROIC >20% •Organic FCF growth >10% •Cash conversion >80% •Debt / FCF < 5x •FCF yield >3% 39 Examples 🧵👇

Warren Buffett hand-picked Todd Combs to come work at Berkshire Combs impressed both Charlie and Warren with his sharp mind He recently gave a brilliant interview where he revealed why he has been so successful Here are 6 lessons I learned in 1 hr 20 minutes:

🏰10 World-Class Compounders for the Next Decade https://t.co/VhIayDdbz6

Buy stocks when consumer sentiment is low:

🏰10 World-Class Compounders for the Next Decade https://t.co/VhIayDdbz6

🏰10 World-Class Compounders for the Next Decade https://t.co/VhIayDdbz6

🏰10 World-Class Compounders for the Next Decade https://t.co/VhIayDdbz6

Worldly wisdom, from Charlie Munger:

Wide moat businesses:

The average investor:

🏰10 World-Class Compounders for the Next Decade https://t.co/VhIayDdbz6

Historical annual returns for the S&P500:

🏰10 World-Class Compounders for the Next Decade https://t.co/VhIayDdbz6

🏰10 World-Class Compounders for the Next Decade https://t.co/VhIayDdbz6

Must-read investing books:

Quality businesses below $100B market cap:

8 Quality businesses: •Medpace Holding •Vitec Software •OTC Markets •Topicus •Fortnox •Bouvet •Qualys •Kainos What else?

🏰10 World-Class Compounders for the Next Decade https://t.co/VhIayDdbz6

🏰10 World-Class Compounders for the Next Decade https://t.co/VhIayDdbz6

The high road's less crowded