Golden Rules for Stock Selection

Golden Rules for Stock Selection

  1. Pick financially sound companies, preferably debt-free
  2. Choose companies that respect capital.
  3. Always stay with leaders in the industry.
  4. Don't buy underlying businesses, buy profitability.
  5. Don't ignore absolute value like earnings yield.
  6. Monopolistic entities make all the money. But be prepared to pay the price for it.
  7. Consolidating businesses are better than fragmenting businesses.
  8. Never ignore Return on Capital Employed and Return on Net Worth.
  9. If there are many competitors, don't bother to pay even the market valuation.
  10. Always stick to what you know best.

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