Legendary fund manager Peter Lynch once said that you shouldn't invest in any idea you couldn't illustrate with a crayon.
Though I'm not much for crayons, I do love the pithiness of that line. We regularly preach the same idea at the Fool: Don't buy what you don't understand. And if you can't simply sketch out a company's business model -- how it actually makes money -- then maybe you shouldn't be investing in it.
While pumping gas recently, I realized that I hadn't seen a Chevron (NYS: CVX) station in a while. A quick search on the Internet revealed that there are only two lonely stations in the greater D.C. area. So how exactly is Chevron making money? Here's a very simple visual that might help answer that question. (Note: I'm focusing on revenues here, not earnings.)
Source: Chevron 2011 10-K.
Think I missed something in this illustration? General thoughts on this exercise? Let me know in the comments section below. And if you haven't already, be sure to follow our Chevron news and commentary using the Fool's free My Watchlist tool.
At the time thisarticle was published Fool.com graphics/photo/art editor Dari FitzGerald doesn't own shares of Chevron. Motley Fool newsletter services have recommended buying shares of Chevron. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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