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Conclusion

Companies that are well managed and well run should be worth more than companies without these characteristics, but that does not necessarily make them good investments. For a company to be a good investment, you need to buy it at the right price. Much of what was said in this chapter is directed toward putting this into practice.

What constitutes a good company? Given the many dimensions on which you look at firms—financial performance, corporate governance and social consciousness—it is not surprising that different services and entities have widely divergent lists of quality companies. Assuming that you create a composite measure that weights all these factors and comes up with a list of companies, you will need to follow up and screen these companies for reasonable pricing. You will also need to be aware of the long-term tendency of companies to move toward the industry average and protect yourself against this phenomenon.


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