Aswath Damodaran has an awesome post on wading through the deadliest buzzwords that are most frequently used by investors to distract and delude themselves and others. I am going to give you the headlines here, header over the real deal after the fold.
Optionality
Question that you should ask yourself:
Does the company in question has the exclusive or close-to-exclusive right to expand into new markets? This exclusivity can come from owning a proprietary technology or possessing an exclusive license to operate in a market.
Growth Potential
Question that you should ask yourself:
To create value, you need to earn excess returns while growing, and to earn those excess returns, you need barriers to entry and competition. Does the company’s competitive advantages allow it to create value from that growth.
Strategic considerations
Question that you should ask yourself:
Can you convert the qualitative benefits into earnings and cash flows?
Disruptive
Question that you should ask yourself:
Is there dissatisfaction with the status quo, either on the consumer side or on the producer side?
Source: If it is a strategic growth investment in China, the numbers don’t matter! Or do they?
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