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Aim for Base Hits, Not Home Runs
Prioritize low-risk investments that yield steady, incremental progress rather than seeking high-risk, high-reward opportunities. This approach, likened to 'base hit investing,' involves consistent effort and a methodical process that leads to long-term success. Performance in investing can be attributed to three main sources: earnings growth, changes in the price-to-earnings (P.E.) multiple, and capital returns through buybacks or dividends. Understanding these fundamental drivers simplifies the investment strategy, grounding it in straightforward mathematics.