1.Can you kill the investment? Is there adult supervision at the company?
2. Is the company essential? Does it depend upon the kindness of strangers?
3. What can the company make? Reasonable profitability for owners?
4. How are owners paid? Distributions?
5. Management – honest in past and present?
6. Does accounting reflect reality?
7. Does the balance sheet match up with the income statement?
8. Catalysts – Buybacks? Misunderstood? Is enterprise having a big problem that is fixable? Everyone’s been burned by the stock so afraid to buy it.
9. Are there irrational fears of current headwinds?
10. Does the business have pricing power or unit growth?
11. Can you hold the investment for a long time & does it improve portfolio performance?
Archives of “distributions” tag
rssThe Win/Loss Ratio
“One common adage on this subject that is completely wrongheaded is: You can’t go broke taking profits. That’s precisely how many traders do go broke. While amateurs go broke by taking large losses, professionals go broke by taking small profits. The problem in a nutshell is that human nature does not operate to maximize gain but rather to maximize the chance of a gain. The desire to maximize the number of winning trades (or minimize the number of losing trades) works against the trader. The success rate of trades is the least important performance statistic and may even be inversely related to performance. … (more…)