If you have any questions on trustworthiness or competence, then avoid the company. The people running the firm must have the highest integrity and openness. They must be candid and not prone to hyperbole. You must feel that managers are giving a truthful and balanced view of the business.
They must be willing to discuss the minuses as well as the pluses – because all businesses have both.
And they must be managers who under-promise and habitually deliver a bit more than they indicated. Be very wary of those who promise great advances because they are unlikely to deliver.
“You can’t make a good deal with a bad person” (Warren Buffett). The purchase of shares is a deal: you must be reassured that stewardship of the company is in good hands.
If there are blemishes on their character, then be wary because people rarely change. If managers are unethical and dishonest no amount of corporate governance checks (e.g., outside directors) or accounting probes will reveal the truth; there are simply too many ways for managers to pull the wool over the eyes of investors. They can get away with spin and falsehoods for many years.
Tip: unreliable types
I'm a full-time investor running my portfolio. I invest other people's money into the same shares I hold under the Managed Portfolio Service at Henry Spain. Each of my client's individual accounts is invested in roughly the same proportions as my "Model Portfolio" for which we charge 1.2% + VAT per year. If you would like to join us contact Jackie.Tran@henryspain.co.uk
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