"A historical perspective on a business provides both a deeper understanding and useful insight into its competitive advantage. You can better understand if the success of the business is due to managerial brilliance or simply being in the right place at the right time." - Shearn

To know where a business is going, you must first understand where it has been. Shearn recommends reading company documents and articles to see how a business has evolved. For lesser-known businesses, he suggests reading through 10 years of the "business description" in the 10K reports.

"Summarize in your own words how the business evolved by noting acquisitions made and new product developments from year to year." - Shearn

Takeaway - Seeing how a company has evolved gives you great insight into its ability to adapt and maintain a competitive edge.

• *Notes are from "The Investment Checklist" by Michael Shearn -Question 5 of "Understanding the Business - The Basics."