Trembling with greed

Cautious Investor's Credo

A Value Investment Philosophy

Recently I've decided to write down my investment philosophy for posterity.  Here goes my first attempt.

1. Always look for a margin of safety
2. Understand that it is not what an individual stock does but what your portfolio does in aggregate over the long term that determines your investment success.
3. Current Ratio of 2 to 1
4. Current market cap of 50% below intrinsic value
5. No accounting fraud of any kind; if you can't trust one of the numbers, you can't trust any of them.
6. Strong earnings and cash flow history with a solid growth trend.
7. Inventory Turnover comparable to industry standard or better.
8. Shareholder oriented management with long term view, not willing to sell the future today.
9. Sensible stock option plan and management compensation.
10. Financial statements that are well explained, no hiding pension expenses or option expenses.
11. Excellent management of receivables and payables.
12. Board of Directors that are not "buddies" of the management.
13. Remember you are competing against no one other than yourself.  You can still become extremely wealthy and have plenty of people outperform you.
14. You will make mistakes.  Learn from them.
15. Remember that not making a decision is a decision unto itself.
16. Try to minimize the emotion of the buy/sell decision and maximize the emotion of the research decision.