I picked up this CD set from the library. I didn’t expect an excellent literature – there were a lot of investing methods on the market and most of them were just average. However I was surprised by the author Phil Town – his investment method was very scientific. And it was a good complement reading of Warrent Buffet’s investment. As Warren Buffett said, ”’Rule number 1 for investing is don’t lose money”’.
Here are four main criteria for investing in a company’s stock:
- Meaning. The company should means something to you as an investor. Translation, you should know the company. You can draw on your experience from three circles:
- Things you are good at
- Things you earn/spend money on
- Things you are passion about
- Moat. The company should have high barrier to entry. If the company has a wide moot, the four ratios below should be at least 10% or above:
- Return of Investment Capital (ROIC)
- Sales Growth Rate
- Earning Per Share Growth Rate (EPS)
- Book Value or Equity per share (BVPS) Growth Rate
- Free Cash Flow(FCF) Growth Rate
- Management. The company should have a good management team. Do a lot of research on the company.
- Margin of Safety (MOR). The company’s market price should be less than 50% of the fair market price.
- Use MACD, 8/17/9 to catch from valley to peak
- Use Stoch, 14/5 to catch the buy/sell line
- Use Moving average, 10 to catch the above line.