The Five Rules for Successful Stock Investing Quotes

“Next, divide free cash flow by sales (or revenues), which tells you what proportion of each dollar in revenue the firm is able to convert into excess profits. If a firm’s free cash flow as a percentage of sales is around 5 percent or better, you’ve found a cash machine—as of mid-2003, only one-half of the S&P 500 pass this test. Strong free cash flow is an excellent sign that a firm has an economic moat.”
― Pat Dorsey, The Five Rules for Successful Stock Investing: Morningstar's Guide to Building Wealth and Winning in the Market

“Going against the grain takes courage, but that courage pays off. You’ll do better as an investor if you think for yourself and seek out bargains in parts of the market that everyone else has forsaken, rather than buying the flavor of the month in the financial press.”
― Pat Dorsey, The Five Rules for Successful Stock Investing: Morningstar's Guide to Building Wealth and Winning in the Market

“The structure of the book is the same as the basic investment process that we advocate: Develop a set of investing principles, understand the company’s competitive environment, analyze the company, and value the stock. If you can follow this process while avoiding most big mistakes, you’ll do just fine as an investor.”
― Pat Dorsey, The Five Rules for Successful Stock Investing: Morningstar's Guide to Building Wealth and Winning in the Market

“Direct-sold retail funds can be great for investors, but sometimes they can work against the fund companies that market them. Throughout the recent bear market, advisor-sold funds did a better job in retaining their assets because financial advisors were able to prevent clients from selling in a panic. A little handholding goes a long way in convincing clients to ride out the turbulent markets.”
― Pat Dorsey, The Five Rules for Successful Stock Investing: Morningstar's Guide to Building Wealth and Winning in the Market

“The basic investment process is simple: Analyze the company and value the stock. If you avoid the mistake of confusing a great company with a great investment—and the two can be very different—you’ll already be ahead of many of your investing peers. (Think of Cisco at 100 times earnings in 2000. It was a great company, but it was a terrible stock.)”
― Pat Dorsey, The Five Rules for Successful Stock Investing: Morningstar's Guide to Building Wealth and Winning in the Market

“I went back and read all the Berkshire Hathaway annual reports. My life changed course as a result.”
― Pat Dorsey, The Five Rules for Successful Stock Investing: Morningstar's Guide to Building Wealth and Winning in the Market

“• Besides fixed assets, an industrial company needs to manage working capital efficiently.”
― Pat Dorsey, The Five Rules for Successful Stock Investing: Morningstar's Guide to Building Wealth and Winning in the Market