The one must-have number for successful long-term investing

How do you decide what to buy?

I get the question a lot and I think it’s a good one. The answer depends on things like how long I’m planning to hold the stock, whether I see it as a value or a growth play, and where the momentum is in the market.

If I’m looking for a long-term investment, though, I don’t start with any of that stuff of with any of the usual measures such as price-to-earnings ratios, earnings growth rates, PEG ratios, or price to book or price to sales.

I start with ROIC—return on invested capital. I don’t think there’s a single number that tells investors more about whether they want to buy and hold a stock. Read more