Focus on Fundamentals

Start with the 10-K

The Annual Report (Form 10-K) is the single most important document for a fundamental investor. It contains:

• Business Overview: How the company actually makes money.
• Risk Factors: What could go wrong (straight from management).
• MD&A (Management's Discussion and Analysis): Explanation of financial results.
• Audited Financial Statements: The raw data you need for valuation.

Understand the "Moat"

Look for sustainable competitive advantages that protect the company's profits from competitors. Common sources of moats include:

• Network Effects: The product gets better as more people use it (e.g., Visa, Meta).
• Switching Costs: It's hard or expensive for customers to leave (e.g., Enterprise Software).
• Cost Advantage: Being the lowest-cost producer (e.g., Costco, Amazon).
• Intangible Assets: Brands, patents, or licenses (e.g., Coca-Cola, Pharma).

Quality Over Quantity

It's better to deeply understand a few high-quality businesses than to superficially know dozens. When analyzing fundamentals, ask yourself: "If the stock market closed for 10 years, would I be happy owning this business?"