1. Valuation - Is this stock seriously undervalued?
2. Balance sheet - Is this stock going bust?
3. Capital discipline - What is the management doing with the cash I'm giving them?
Jean-Marie Eveillard of First Eagle
Some will refer to the KISS method - "Keep it Simple, Stupid". I would like to say, "Keep it Sophisticatedly Simple". It is the same thing. Keep the moving parts of the model simple, minimize the features. If you do have use more features, make sure that they can be grouped or categorized into a simple set of market drivers.
Put differently, can the model be explained to simply to a less sophisticated investor so it will make good intuitive sense. There can be a significant work with data arrangements and analysis, but the core strategy should be driven by just a few simple features.
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