incentives
Integrity Is Non-Negotiable
The rule
You are handing your money to the people who run the company. If they are dishonest, even great numbers can fall to zero, like a strong-looking house built on sand.
Where it flips
Push this too far and you will find no company to buy, because no team is perfect. So do this: reject clear dishonesty fully, but judge small, human mistakes with fair balance.
When you buy a share, you trust the people who run that company with your money. So their honesty matters most. A firm can show lovely numbers and still ruin you if the owner is dishonest. He may cheat, quietly take out cash, or hide the truth in the accounts. Fast growth or a cheap price cannot make up for people you cannot trust. If there is a real doubt about honesty, the answer is simple. Walk away, however good the story sounds.
A worked example
Aarohi finds a fast-growing company at a tempting price. But she notices cash quietly moving to the owner's other firms. She says no. A year later the accounts are exposed and the share price crashes. [illustrative]
How to spot it
- ·a clean record of dealings and honest disclosures
- ·past actions match the promises made
- ·one serious honesty doubt ends the whole study
Pulak Prasad · What I Learned About Investing from Darwin