Rules of Common sense investing
Rule 1: Business must produce product or service for which the demand must grow with
time.
Rule 2: The business must produce a good quality non-Durable Product or Service.
Rule 3: Business must be Durable Competitive and should possess an Economic Moat
Durable Competitive Businesses and Price Competitive Business.
Rule 4: Good Financials.
Here are the key financials one has to look for in financial statements:
- Growth in Sales.
- Growth PAT or Net Profit
- Consistency or growth in Net Profit Margins
- Low Long Term Debt to Equity Ratio
- Consistency or Growth in Return on Equity.