Investment Guide
The core idea in long-term investing is simple. Buy quality companies at fair prices.
Attractive Valuation
A great company is not always a great investment. You want to buy when the price is below what the business is actually worth. The PEG ratio helps identify companies that are growing earnings fast relative to their current price, giving you a margin of safety and room for the market to recognize their value over time. Adding a momentum check helps you avoid buying into hype.
Financial Strength
A durable company can survive downturns without being forced to make short-term decisions that hurt long-term value. Low debt means earnings can be reinvested in growth rather than servicing interest. Dividend payments can signal that a company is mature, profitable, and earns more cash than it needs.
Low Risk
The safest investments are in companies you truly understand and whose products or services you like. A strong brand creates customer loyalty, pricing power, and predictable earnings. When you know why a business wins, you are less likely to panic when headlines turn negative. Spreading your investment across multiple companies further reduces the impact if one single stock underperforms.
Understanding the Key Metrics
PEG Ratio
Measures the stock price and current earnings in relation to long-term earnings growth. The PEG Ratio is calculated by dividing the P/E Ratio with the long term eps growth estimate. This insures that you invest in profitable companies, that is expected to earn more money in the future.
Debt / Equity
Measures financial leverage. The less debt a company have the more of it's earnings it can use to invest in growth rather than paying down debt.
Momentum (RSI)
Measures short term investor sentiment. This can give you an idea if a stock is potentially over hyped by investors. Though it should never be considered a sole reason to buy or sell.
Dividend Yield
Measures how much cash a company pays back to shareholders compared to its stock price. We use it as a simple sign that a company is mature, profitable, and earns more money than they need.