It’s mine because the combination meshes with how my actual investing behavior evolved over the past five years. I started out following Jim Cramer and thinking that a month was a reasonable investing time horizon. I gradually learned that such a short horizon was trading and speculating – not investing.

I read a lot and tried things and found that some things worked better for me than others. I found that Warren Buffet’s “forever” holding period works very well with my basically long range “turtle” approach to life in general. And I realized that if “forever” was indeed my preferred holding period dividends were required, otherwise stock certificates may as well be used as wall paper.

So I began my search for a personal definition of intrinsic value. It’s resulted in the following 14 value elements.

From Benjamin Graham, Peter O’Shea and Jonathon Worrall I’ve taken:

(1) Strong Cash Flow

(2) Strong Earnings Growth

(3) Dividend Consistency

(4) Consistent Dividend Increases

From Benjamin Graham I’ve adopted:

(5) Profitability

(6) The Formula: E(2R+8.5)*Y/4 = Intrinsic Value per share

From Warren Buffet:

(7) Good returns on equity

(8) Little or no debt

(9) A business model I understand

(10) A durable competitive advantage

From Charlie Munger:

(11) Measure Risk

And I want my investments to have a relatively high probability of achieving my goals of:

(12) Providing reliable long term dividend income streams

(13) Increasing annual dividends faster than the inflation rate

(14) Expected to generate at least a 9% total return compounded annually

In my previous post I described how I would measure

(3) Dividend Consistency

(4) Consistent Dividend Increases

Next I’ll determine how I’ll measure the other 12 of the 14 chosen value elements.

**14 Value Elements in My Definition of Intrinsic Value**

(1) Strong Cash Flow

(2) Strong Earnings Growth

(3) Dividend Consistency

(4) Consistent Dividend Increases

(5) Profitability

(6) The Formula: E(2R+8.5)*Y/4 = Intrinsic Value per share

(7) Good returns on equity

(8) Little or no debt

(9) A business model I understand

(10) A durable competitive advantage

(11) Measure Risk

(12) Providing reliable long term dividend income streams

(13) Increasing annual dividends faster than the inflation rate

(14) Expect to generate at least a 9% total return compounded annually

Link to Other Topics in the Special Report: What Is Intrinsic Value?

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