However, that is just one of the methods. The one shared above is a quantification method using calculation.
In real world, when you buy a business that is NOT run by you, the ultimate Single Main Factor is
Who Is Running The Business ?
The company may did great or terrible in the past, what really matter is who is running the business now and what he or she is going to do about it. So the more and closer you know about the management of the company you are buying, the better position you are in.
I have seen many times stock buyers simply buy in blue chips because the company was doing great. Without realizing the successful CEO has left replaced by a half empty manager. Needless to say, all things go downward since then.
I have seen many times stock buyers simply buy in blue chips because the company was doing great. Without realizing the successful CEO has left replaced by a half empty manager. Needless to say, all things go downward since then.So when you are ready to buy a particular stock, spend a little bit more time to find out who is running the company. Check and see if there are any hanky panky stories came out from google.
If possible, try writting them a letter or email and see if you get any reply. Try to meet and talk to them. Usually the really great successful CEOs are friendly while those blood sucker CEOs will just slamp door on your nose.
With a Good management,
a bad company has a chance
to be great again !
Without one,
the best company
will eventually sink indefinitely ...
