Over the past 6 months I’ve worked on my approach to finding good investments and I think I’m quite happy for now. I started out just looking at price to book, which often gave me companies with lots of debt, i.e. Ennstone, which then fall over at the first sign of trouble. Then I looked at liquidation value and cash flow, to protect against such a failure. However, I’ve now simplified it so that I pretty much just look at liquidity (current and quick ratios) and debt to equity ratios. Once the companies are filtered by those criteria I just buy whatever is cheapest to book, with half book being the most I’ll pay. The ratios I use aren’t set in stone, but they are ball parks to get me started and the amounts come from various texts as ‘reasonable’ amounts.
Dear fellow investor,
This website was my home on the internet from 2008 to 2021, but I have now moved onwards and upwards to:
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