Frequently Asked Questions
What WISEplanning has learned over many years is that it is not where we invest but rather how we invest.
The methodology that he adopted as a value investor revolved around the basic four step model that he learned from Warren Buffett and his teachings. This is not the model that he uses but this is what Peter started with back in the day:
- Compare price and value (these days this is close to the last step in the process, rather than the first);
- Look for steady earnings growth;
- Check the dividend payout ratio (looking for businesses that retain 50% or more of earnings); and
- Check how well the business uses its capital, as measured by return on capital and return on equity.
The above is where Peter started out 15 – 20 years ago when Warren Buffett was not the household name that he is today.
Our methodology now is more advanced and includes the economics of the business.