Investment Framework

Over time, the structure of equity returns has shifted away from cash dividends toward share repurchases and retained earnings reinvested within the business. As a result, a large portion of intrinsic value in modern equity valuations is often derived from terminal value, reflecting expectations about a company’s durability 10–20 years into the future rather than near-term cash distribution.

Because terminal value often represents the majority of intrinsic value, businesses with a high likelihood of remaining economically relevant over long periods should be valued differently from those with uncertain long-term survival. A company that can reasonably be expected to exist and generate owner earnings 15–20 years from now warrants a materially different valuation than one whose economics depend on near-term conditions or favorable narratives.

Within this framework, risk is defined as the probability of permanent capital impairment rather than short-term price and earnings volatility. The analysis prioritizes business resilience, incentive alignment, and long-term economics over forecasting near-term outcomes. I do not engage in short-term trading, cash flow forecasting, macroeconomic prediction, or narrative-driven investing.

Economic Durability and Risk

I prioritize businesses with durable economic characteristics, including pricing power, cost advantages, high switching costs, or network effects that protect long-term profitability. Preference is given to companies operating within a clear circle of competence, with understandable economics and products likely to remain relevant decades into the future.Financial strength is essential. Businesses must demonstrate high returns on invested capital, conservative balance sheets, and the ability to generate excess free cash flow. Management quality matters most in capital allocation decisions, with emphasis placed on owner-oriented behavior, discipline, and long-term value creation.Risk is evaluated through inversion — asking what could permanently impair the business over long periods rather than what could go right. Capital is deployed selectively, with a preference for maintaining flexibility and avoiding forced decisions.

Current Recommendation

High Yeilding Cash Equilivents:
Short term US Treasury Bills/Money Market Funds