Hewitt’s columns tend to focus on quality of earnings issues. His site, Earnings Power, focuses on several ways to use quality of earnings as a stock selector, on both the long and short side See this Business Week article for more details). I’ve been playing with some of his ideas, combining earnings quality with quantitatively screened earnings momentum; I haven’t finished backtesting it yet, but at first blush it appears to be a very effective tool for finding high growth, low risk stocks. (I’ll update this sometime in the future).
His approach is very different than mine. I’m a top down, macro strategist; he’s a bottoms up, funadamental analyst. Regardless, I find his perspectives refreshing, and particularly enjoy when he addresses larger investment themes. Hewitt’s writings are chock full of the kind of common financial sense which is all too uncommon on Wall Street.
His column last month was a perfect example of this: Nine Basics of Sound Investing. Here’s an excerpt:
"Wall Street is awash in numbers, and sometimes all of these
figures can make it hard to see the forest for the trees. If you occasionally
feel lost in the woods, here are some ideas from my book It’s Earnings That
Count that can improve your investing results and give you some peace of
Get your financial house in order
Save and invest regularly
Formulate a business plan
Take an accounting class
Be skeptical of analysts’ reports
Create an on-deck circle of stocks.
Don’t throw Hail Mary passes
Learn from your mistakes
Take care of yourself
Each of these topics are expounded upon in typical Hewitt style: straight forward, common sense advice. I haven’t seen Hewitt’s book yet, but if its anything like his columns then I’m going to have to take a look . . .
Nine Basics of Sound Investing
RealMoney.com 1/13/2005 4:00 PM