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Business Modeling

Models allowing you to Read a Business Like a Book!

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Momentum

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Linear Momentum of an Isolated System is Conserved:

Momentum = Mass x Velocity (vector quantities with size and direction)

Generally, Momentum describes how much a system resists an external force. An experienced investor managing $100 billion using his proven methods is not going to change his positions based on insignificant fluctuations on the market as he has a big amount of Momentum. In contrast, a small private investor managing his $10.000 life savings is vulnerable to changing his mind about his positions by the most insignificant fluctuations or market news. For a discussion on a system sticking to its previous actions, see Newton’s Laws.

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Jakub Smrček
Jakub Smrček

Written by Jakub Smrček

Qualitative investment analysis is about understanding a business before taking out your calculator. This blog teaches you how to do it for common stocks.

Business Modeling
Business Modeling

Published in Business Modeling

Models allowing you to Read a Business Like a Book!