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A Boring Way to Get Rich...and a Special Announcement - Views on News from Equitymaster
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The Equitymaster Research Digest

A Boring Way to Get Rich...and a Special Announcement
Sep 5, 2017

  • Kunal shares his take on reading annual reports
  • Sarvajeet wonders what the stock market is smoking!
  • The final nail in the Demonetisation coffin
  • A special announcement

Kunal made yet another confession today.

Readers of The 5 Minute WrapUp would know that Kunal, who heads Smart Money Secrets, has already shared his dislike for fiction.

He also confessed that he didn't understand annual reports a few years back.

Today he admitted that he's not an expert in macro-economics.

But so what?

None of this this matters in the world of investing.

Warren Buffett once said that only two things matter if you want to get rich in stocks. You need to know how to value a business and how to think about stock prices.

Reading annual reports is one of the best ways to understand a business.

Here's Kunal...

  • It's ridiculous if you think about it. Most of us know, deep down, that reading annual reports is the best way to really know a company. Furthermore, most of us are fully aware that Warren Buffett spends most of his days reading annual reports.

    Yet, though this path to billions is clearly marked, nobody actually reads annual reports!

    Everyone wants to have read an annual report but nobody actually wants to do it. Even those who do read annual reports often only go through the most recent year or two.

    Why?

    Let me be frank: Because reading annual reports could be really dull and uninteresting at times.

    Even I find them boring at times. And I'm a chartered accountant!

    The average annual report ranges between 150 and 200 pages. So if you read the reports going back at least a decade - which we strongly advise - that's 1500-2000 pages...per company!

    Reading these things requires the patience of a saint...and even that may not be enough.

    Because of regulatory requirements, annual reports often contain loads of financial data that require professional expertise to interpret.
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