Key Principle No. 6

Qualitative analysis is just as important as quantitative.

One of the biggest misconceptions about investing is that if you crunch enough numbers you will eventually find the answer. Nothing could be further from the truth.

Listening to the tone of voice of the CFO when he answers questions is important.

Casual information garnered by walking through a shopping mall is important.

Understanding the personal history of a management team is often a key insight.

There are hundreds of other qualitative factors that are just as important as any quantitative factor.  Learning what these factors are and how to judge them is the difficult part. The only way to learning is to jump in the pool and start swimming.

If you have a background in mathematics, statistics, accounting, or modern financial theory, I beg and plead with you to spend a few hours reading The Tao Jones Averages by Bennett Goodspeed before you start making investment decisions.

Throughout our reports we will point out which qualitative factors were important to our decision making process.

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