Bill Ruane’s Rules for investing as adapted from his “Memorandom of Investment Philosophy” by Louis Lowenstein in his working paper number 290.

a.     Buy good businesses.

                                                              i.      The single most important indicator is a superior return on capital, because it means the company enjoys a unique proprietary position.

b.     Buy businesses with pricing flexibility.

                                                              i.      Always true but particularly in the inflationary period in which he wrote.

c.      Buy stocks at modest prices.

                                                              i.      While price risk cannot be eliminated, it can be lessened materially by avoiding high multiples.

d.     Buy strong balance sheets.

                                                              i.      If this rule is violated, none of the others will matter.

e.     Buy cash generating businesses.

                                                              i.      Those businesses where the earnings are truly available to create future growth or for payment to stockholders.