For any investor there is only one quest that matters: the search for value. But knowing which assets are genuinely cheap is very difficult; this intellectual challenge explains why so few market professionals are consistently successful.

Perhaps the most subjective aspect in analysing any business is the quality of earnings. By this I mean not so much whether the accounts are accurate and conservatively stated, but whether the earnings are repeatable and bankable. Many enterprises have an unsustainable model, only temporary advantages, rising competition and weak fundamentals. They should, all other things being equal, trade for a low multiple.

By contrast, some companies have high forward visibility of revenue, defendable and attractive margins, a strong franchise with high barriers to entry, proprietary technology or brands, and a sizeable market share. Such rare and enviable situations are usually very expensive to purchase.