THE RATIONAL INVESTOR

Stocks are simple. All you do is buy shares in a great business for less than the business is intrinsically worth, with management of the highest integrity and ability. Then you own those shares forever. I will tell you how to become rich. Close the doors. Be fearful when others are greedy. Be greedy when others are fearful.

January 05, 2007

My Approach

Approach: Discover great company with substantially under value

Criteria for great company:
1. ROE>15%, EPS growth>15% in last 3-5 years
2. Sound balance sheet

3. Future analysis:
can be performance be sustained in the feature 3, 5 and 10 years?
- can the growth rate, ROE be sustained

4. Under value

Market value < 2/3 NCAV, the little the better.


TO DO JOBS

1. Suppose I am at year 2003, if i applied this approach, what are the performance of those stocks that i will buy?

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