Where do Investment Returns Come From? I had an interesting conversation about an investment with a friend. Through the conversation it became clear that they were not aware where their potential investment returns were coming from.  It’s a simple question but what’s driving investment returns?

Investment Return irregardless of asset class (e.g. bonds, stocks, real estate) are generated from:

1. Return of Cash

2. Growth

3. Multiple Expansion

What makes a good company? Is it the one your friends and family rave about, or is it simply gross profit and revenue growth? At its core, a good company is defined by its ability to achieve high rates of return on capital (ROC) while maintaining a sustainable competitive advantage.