BILL GRACE'S CONTRARIAN CHECHLIST
1. Buy low, sell high.
2. Buy on bad news, not on good news -- unless the news is very unexpected and you get a very early start.
3. What looks like a dog may not be; real value eventually establishes itself.
4. Buy mostly stocks with low P/E ratios. But the key is future, not present, earnings.
5. Buy at a discount -- a price per share lower than book value per share -- but remember that real asset value is not always stated.
6. Buy stocks with high yields. Investment value includes appreciation plus yield. High yielding stocks historically perform better.
7. Choose companies with competition and in established industries. It is easier to judge their worth.
8. Choose companies whose stock prices have plummeted most. The comeback could be all the more lucrative.
9. Do not try to catch a stock at the bottom of the market. Wait for it to come back at least a bit before you buy.
10. Favor companies with:
* a history of dividend consistency
* a record of previous comebacks
* a promising new product or one on the horizon
* wide distribution of stock ownership (instead of five institutions owning 75% of the shares)
* high asset liquidity
* changes for the better in management
* a sound debt-to-equity ratio
11. Beware of companies with:
* hidden liabilities (read those footnotes!)
* heavy short-term debt