What doesn't the NBS Fund care for


The common thread amongst financial education and your stock standard financial professional is that diversification is essential. For fund managers, Diversification is crucial as they are judged on annual performances, and compared to benchmarks and industry peers. Benchmarking ensures that their funds aren't significantly affected by cyclical downturns in particular industries. 

For an individual investor, diversification is not as important. If an individual can pick 10-15 excellent quality companies over their lifetime, they will have had a very successful investing career. As individuals we don't have that constraint of needing to evaluate yearly performance, therefore diversification isn't important for us. What is important is the quality of companies we invest in. 

Modelling & Forecasting

Financial modelling does have its place in equity valuations. Companies with very consistent cash flows and earnings profiles  can be valued using methods such as the discounted cash flow method. However for your average company, it's almost futile to try and predict earnings a year from now, let alone 10. These complicated models are significantly affected by the smallest changes in their inputs; a 1% difference in a discount rate can determine the difference between a buy/sell outcome.

If you aren't familiar with discounted cash flows and discount rates don't stress, it's not important for individual investors 

The valuations methods used here will be as simple as they come, with only a very little understanding of accounting & mathematics needed.