Nine Basics of Sound Investing

Hewitt Heiserman Jr. is the author of "It’s Earnings That Count." He also is a fellow contributor to’s Real Money.

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
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
Hewitt Heiserman 1/13/2005 4:00 PM

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  1. Paul Nunes commented on Feb 13


    I enjoy reading your columns in Realmoney. I met you at conference and enjoyed your part of the program. Your suggestions are working!

    I have Hewitt’s book and it is worth the read. I have found reading a 10-K and using the Defensive Income statement and the Enterprising Income statement much more thorough. If nothing else you’ll work through the numbers.

    Thanks for writing!

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