Sunday, 26 August 2012
Investing for the Long Run - An approach
1. I am looking at a 10 year time horizon in this investment.
2. My objective is to grow my initial capital 400% in 10 years, that is, doubling at the 5th year and quadrupling at the 10th year.
3. The sum invested will be a big sum of meaningful amount (a fat pitch).
What stock to buy?
1. Good quality growth stock, with durable competitive advantage and economic moat.
2. Revenue and earnings growing at >15% per year, that are predictable and sustainable.
3. ROE > 15% per year.
4. FCF +++
5. Good management with integrity
When to buy?
1. When the stock price is compelling, that is, undervalued.
2. A low buying price translates into higher returns on the invested amount.