Wait for the Price to come to You (Timing versus Pricing)

Invest in businesses.  Recognise quality.  These are the factors that make a company great:

• it must have a good product,
• it must have a powerful competitive position and,
• it must have a strong management and culture that are open to change.

If you find all the above qualities together, you'll have a business that's making excellent returns on capital.

You should be able to confirm this by calculating that number from the accounts for the last few years, and checking how the cash is flowing through the business.

The next step is to work out the PE ratio that you'd be happy to pay for the business, or a dividend yield or a cash flow yield, or all three.

Then you wait, making adjustments to your valuation as needs dictate, so when the price comes into range, you'll be ready to pounce.