What is a great business to own?
A:
1. A business that you can understand. For example, Starbucks Corporation. It makes money by selling coffee at its stores located all around the world. 2. A business that has honest and competant management. How successful has the company been under it's current management? What are the average earnings on total capital employed in the business? How much does management pay themeseleves? Questions like these help to answer whether or not management is both honest and competant.
3. A business that has favorable long term prospects. How likely is it this business will be around 5, 10 even 20 years from now and how do the prospects look 5, 10 or even 20 years out?
Great Business
Great Price
What is a great price to pay for a business?
A: When it's selling at a deep discount to its present value that you determine it could be worth. Share prices of stocks go to extremes both to the upside and to the downside. Having the judgement to recogize both overvaluation and undervaluation in a given company is what value investing is all about.
"Some of the best investments you will make will be by buying shares of a great business at a great price and fully participating in its success." Jason Tillberg - 2009
How do you know when to Sell?
A: When the risk and reward no longer merit the investment return you believe will be had at the current price. The general economy does not go up in a straight line. Business conditions go from being very favorable to very unfavorable in cycles. These have great influences on a company's ability to generate earnings. By making sound and reasonable judgements to a company's ability to generate future eranings, you can determine that a stock at a current price is near fully valued and no longer merits holding.
When to Sell
Disclosure: This is not a means to solicit any of the securities mentioned nor does it recommend it for any person before they speak with a licensed professional investment advisor for their own suitability. Investing in Equities bears risk of capital loss. This is strictly the opinion of Jason Tillberg, President and founder of Tillberg Capital Management, Inc. and shall not be held responsible for investment loss from this writeup.
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