Each has something to offer. Once we complete our initial screen we conduct fundamental research on the companies using their financial statements. Our primary sources of information are company financial reports, Value Line Investment Survey, Wall Street analysis, Morningstar Research, Business Week, and other financial publications. We use this information in trying to understand how the company achieved the numbers that attracted us in the first place and to determine if those numbers are sustainable. We then conduct interviews with management to the extent we need their input. Once we identify the companies we want to own we use quantitative analysis to help us identify the buying and selling pressures that are driving the stock price currently. This is the bottom-up process.

We build bottom up, but we also edit top down. We think in terms of three-time frames for investments; the long-term climate, the intermediate term business cycle (which we call the seasons) and the short-term day to day market (which we call the weather.) We believe that the investment climate changes due to changes in inflation and interest rates (which often result from government policies).

We always look for good companies at cheap prices, but we monitor whether in fact there has been enough of a change in the climate to modify our definitions of good companies and cheap prices

The seasons correspond to the business cycle. Once we have identified the climate, we are fond of playing that cycle. Once we understand the climate and the season, the weather (day to day fluctuations in stock price) are largely irrelevant to our decision making but can be useful to see if someone will pay premium prices for our companies or sell us their companies cheap.