As always I like things which are simple and easy to understand which is why I created Simple Investing Approach.
Therefore, today I would like to share with you about the 3R Model, something which I learnt recently and would like to simplified it further.
So how do we approach investing simply by using the 3R Model? What exactly is the 3R Model?
Basically, 3R means:
1) Right Business Model
We need to invest in a business model that we understand and avoid those we don't. We must choose a company with moat (competitive advantage). We also need to ask ourselves whether the company will still be around in 10 years time or more. Are they innovators or just a follower in the business world?
2) Right Management
Management of the company must have integrity. How do we know? Simply by observing their actions. Did they fulfil the promise they made? Did they admit its their fault if they make a mistake? Are they one of the substantial shareholder of the company?
3) Right Valuation vs Price
Do they have consistent growth (preferably more than 15%), net profit or earnings? Are we overpaying for their business?
In summary, we want to own a great leading everlasting company at the right price that comprise of honest able people.
Therefore, today I would like to share with you about the 3R Model, something which I learnt recently and would like to simplified it further.
So how do we approach investing simply by using the 3R Model? What exactly is the 3R Model?
Basically, 3R means:
1) Right Business Model
We need to invest in a business model that we understand and avoid those we don't. We must choose a company with moat (competitive advantage). We also need to ask ourselves whether the company will still be around in 10 years time or more. Are they innovators or just a follower in the business world?
2) Right Management
Management of the company must have integrity. How do we know? Simply by observing their actions. Did they fulfil the promise they made? Did they admit its their fault if they make a mistake? Are they one of the substantial shareholder of the company?
3) Right Valuation vs Price
Do they have consistent growth (preferably more than 15%), net profit or earnings? Are we overpaying for their business?
In summary, we want to own a great leading everlasting company at the right price that comprise of honest able people.
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