These Japanese stocks are so obviously strong and easy to understand that you barely think about them - But when you do, you realize how stupid you've been for not owning them
Check the research studies. Sales growth actually says little about future stock performance. High growth rates usually attract competitors, which leads to a natural correction and mean reversion.
First, thank you for sharing your well-thought-out approach to investing in the Japanese stock market. Your logical and disciplined technique for picking individual stocks makes a lot of sense.
Second, I'm sorry to hear that you're having trouble with Stripe. I hope the situation is resolved quickly.
Third, since you're interested in using quantitative filters, what's your opinion on using free cash flow margin to rank stocks?
Thanks you Mark. I really appreciate the thoughtful message, and I'm honestly so honored to have had your support for so long.
On your third point: I’m a big believer in filtering with free cash flow metrics, but I treat free cash flow margin as more of a supplementary check than a ranking tool. The core of my process still starts with price vs. intrinsic value, P/E, P/B, and owner earnings relative to market cap. Free cash flow margin is useful to flag operational efficiency, but on its own, it can be misleading. A high margin doesn’t mean much if the company’s cash flow is lumpy or if capital reinvestment opportunities are nonexistent.
That said, in Japan, where accounting can be conservative and CapEx-heavy businesses often dominate, I do look at consistent FCF margins over a 5–10 year horizon. But I always pair it with return on equity and whether management is actually doing anything intelligent with the cash (spoiler: often, they’re not).
And thank you for the kind words about the Stripe mess.
Check the research studies. Sales growth actually says little about future stock performance. High growth rates usually attract competitors, which leads to a natural correction and mean reversion.
First, thank you for sharing your well-thought-out approach to investing in the Japanese stock market. Your logical and disciplined technique for picking individual stocks makes a lot of sense.
Second, I'm sorry to hear that you're having trouble with Stripe. I hope the situation is resolved quickly.
Third, since you're interested in using quantitative filters, what's your opinion on using free cash flow margin to rank stocks?
Thanks you Mark. I really appreciate the thoughtful message, and I'm honestly so honored to have had your support for so long.
On your third point: I’m a big believer in filtering with free cash flow metrics, but I treat free cash flow margin as more of a supplementary check than a ranking tool. The core of my process still starts with price vs. intrinsic value, P/E, P/B, and owner earnings relative to market cap. Free cash flow margin is useful to flag operational efficiency, but on its own, it can be misleading. A high margin doesn’t mean much if the company’s cash flow is lumpy or if capital reinvestment opportunities are nonexistent.
That said, in Japan, where accounting can be conservative and CapEx-heavy businesses often dominate, I do look at consistent FCF margins over a 5–10 year horizon. But I always pair it with return on equity and whether management is actually doing anything intelligent with the cash (spoiler: often, they’re not).
And thank you for the kind words about the Stripe mess.
That makes sense! Thanks for the clear explanation.