📖John Neff
Understand Before Investing
Only invest in what you can explain simply.
Never invest in a business you cannot explain in simple terms. If you can't describe why a company is valuable, you don't understand it well enough to own it.
🏠 Everyday Analogy
📖 Core Interpretation
John Neff emphasizes durable business quality over short-term noise. A strong model, real competitive edge, and disciplined capital allocation matter more than quarterly excitement.
💎 Key Insight：Simplicity of explanation tests depth of understanding.
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❓ Why It Matters
Without business-quality filters, investors drift toward stories rather than economics. Durable cash generation is what supports long-term valuation.
🎯 How to Practice
Use a checklist covering moat, management, unit economics, and capital allocation; track long-term cash generation instead of quarter-to-quarter noise.
⚠️ Common Pitfalls
Buying narratives instead of cash-generating economics
Overreacting to short-term operating noise
Ignoring management quality and capital allocation
📚 Case Studies
1
Cyclicals After Recession Fears (1990)
During early-1990s slowdown, Neff accumulated beaten‑down cyclical stocks while many investors fled to safety, focusing on solid balance sheets and dividend support.
✨ Outcome：As the economy recovered, these holdings outperformed the market over subsequent years, rewarding long‑term patience.
2
Oil Shock Recession (1973)
Neff bought undervalued cyclical stocks hit by 1973–74 bear market, emphasizing low P/E and strong cash flows despite recession fears.
✨ Outcome：Portfolio declined less than market and rebounded strongly as earnings normalized, demonstrating focus on downside protection via valuation.
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