🪬Terry Smith's Insightful Advice for Investors to Spot Red Flags in Corporate Communication: He shares insights on words and phrases used by company management that investors should be wary of. #Thread👇
#shares #management
@Vivek_Investor @SteadyCompound @QCompounding…
#shares #management
@Vivek_Investor @SteadyCompound @QCompounding…
1/8 🗣️ “Beware of management using buzzwords!” Terry Smith warns investors to watch out for language that strays from its original meaning. Think critically about how companies present information. 🧐💼
2/8 📊 “Leverage” – used 80 times in a Walmart presentation. This isn’t about borrowing or lifting, it’s an attempt to appear knowledgeable while distracting from falling sales. As an investor, stay vigilant about the words used by management. 🚫🔄
3/8 🤔 Did you hear about “runway” to develop sales or “key” objectives? What about “footprint” in business? As an investor, question these terms. Demand clear, precise language from management. Be skeptical of words misapplied from their original contexts. 🛑✍️
4/8 👀 When you hear management talk about “granular data” or mention their “pension pot,” remember that simpler words like “detail” or “pension fund” work just as well. Beware of efforts to sound profound or critical. Make sure you understand their intent. 🤨💬
5/8 🚫 Do you get suspicious when someone starts with “to be honest”? So does Terry Smith. When analyzing company statements, be wary of phrases that make you question the speaker’s sincerity. Trust in management is essential for any investor. 🤝
6/8 🚢🔀 Would you steer a boat by committee? When a company mentions a “steering committee,” be cautious. Organizations run this way may struggle to achieve good results. Look for decisive leadership when making investment decisions. 🧭🎯
7/8 🚨 Introducing Smith’s Law: “Don’t use an expression if its opposite is nonsensical.” Like a strategy of “select acquisitions” – would anyone admit to indiscriminate acquisitions? Question these statements and ask for clarity from management. 🤔🗯️
8/8 🗒️ At Fundsmith, Terry Smith maintains a list of suspicious words from companies. This unique practice helps identify quality management, leading to more informed investment decisions. As an investor, stay sharp and evaluate the language of management critically. 🧠📝
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