I own a range of companies, some for the long term (hopefully 5 years or more), and some very speculative (more like gambling).
For the long term I like businesses that have ‘Low Debt’ and ‘Forecast High Growth in NPAT’ and I must be almost certain that they can achieve that High Growth into the future. They may be leaders in their field (eg Cochlear, Resmed etc) or dominate an industry (Visa) or they are in a high growth area, (eg businesses that benefit from the increased use of the internet: Seek, Baidu, Priceline, etc.). I then try to buy them at a reasonable price; I have a valuation method based on the future growth rate. It is also important to admit when I am wrong and Sell, even if it means taking a loss.
Note: I worked in the technology area and I have friends who still work in the technology area, so I am comfortable investing there. But I do not think it is necessary to know everything about a product or service to invest in it, but I need to have an opinion of its future prospects based on whatever information I can get through research.
