A great business, or one that will grow profits and cash flow substantially in the long-term future, must be selling a product or providing a service that its customers would want to purchase. Consequently, our job of finding a great business begins with understanding consumer demand.
1) Observe Human Societies
To understand the people in a single society, we first broaden our perspective: after we observe and analyze the behaviors of people in multiple societies, we compare and contrast them to find patterns and causal relationships among economic, political, religious, and social phenomena.
2) Understand Consumer Demand
In the process of connecting dots in the past and present, we generate insights that we can use to predict the future. Specifically, we are interested in understanding what people will spend their money on.
3) Find the Best Investment Idea
Finally, we apply the insights gained in the development of our investment theses. We subsequently test and confirm our forecasts based on insights with future data.