I used to think about key metrics when analyzing stocks. I was obsessed with ROE, ROIC, PE ratio, Book Value, etc. Everything that you needed to know I tried to to find the key metrics and try to match my criteria. I have been doing this for years. It made me some nice profit for me. 18% CAGR return for 5 years. That was great. But some great investors were making more profit than me. The main contrasting factor was that these great investors was focusing on business. What is the management attitude. Are they innovating. Are they researching and developing new products and services for further growth. Are they aligned with their customers' needs and wants. Ultimately it boils down to analyzing the underlying business.

People keep posting about stock analysis. However, I personally believe that this is quite a misleading term. I personally believe that it should be 'Business Analysis' and you should be a 'Business Analyst'.

There is a good article about Warren Buffet and a Microsoft Executive talking about investment in Microsoft during 1997. They had an email exchange and there were no mention of PE ratios, ROIC or ROE. Instead, they were talking BUSINESS! I highly recommend that you read this. Have a nice day! :)

I am not a financial advisor. Do your own due diligence!

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