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TMF Otter,

Along the same line as Albert Einstein, the contemporary popular (?) American philospher and writer, Sam Keen, said, "prefer simplicity, but respect complexity".

While searching for companies that have a sutainable competitive advantage (the "be-all end-all", it may be that most such companies share qualitative characteristics. The problem to me seems to be in trying to develop numerical criteria valid across a reasonably large set of companies. The value of the numeric criteria is to sift through a large number of companies to find those for closer examination, including qualitative assessment.

Reviewing the RM holdings, one could be forgiven for assuming that the RM criteria prefer Into-Tech and Drug companies (8 out of 11 companies). According to S&P information these eight companies are from a set of about 120 S&P companies compared. Of the remaining three, two are financial for which the RM has in the past admitted the numerical criteria apply somewhat poorly. Whatever, the new criteria would happen to be they must have better balance in terms of identifying potential RM from a reasonalbe range of sectors.

I'm not an investment professional, but a defence analyst. So, I can respond to at least your analogy. A defendable fortress must take into account the capabilities of your opponents. Remember what happen to the French and Belgian fortifications in 1940. Extending this to the RM's problem, I postulate that the RM can develop simple numerical criteria, but these would differ from sector to sector. If the RM tries to develop a grand universal set of criteria, then it will become too complicated.

Excuse me, but my day job calls.

P Chouinard
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