Tuesday, 4 December 2018

True measure of a Successful Investor

The true measure of a successful investor is not a comparison of performance against the NASDAQ or the Dow Jones Industrial Average (DJIA) or even the S&P Index, but rather how well a portfolio performs during down markets.

  • During the period when the market was losing money, a successful value investor was adding the greatest value to his/her portfolio.  
  • Conversely, when the overall market was achieving high growth, a successful value investor was not able to add value.

When you invest in companies with earnings that are growing over time and which are not as vulnerable to competition, you soon dramatically build up a snowball of earnings.

  • Through buying companies with earnings, the successful investor can buy more companies with those earnings.
  • The type of industry doesn't matter; the quality of those earnings do.
  • This capital structure has created an unlimited source of cash and a brilliant earnings business model.

Buying earnings of companies at attractive prices with outstanding management and with remarkable competitive advantages will ensure you will be a successful investor for the long run.

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