🥤My yardsticks on long term investment

Using some modifications on Magic Formula of Joel Greenblatt, my thoughts on investment are based on the below 5 yardsticks:

1. Return on equity: at least the return is higher than the prevailing market bank interest rate.
2. Cash flows: company may be making profits but I would set an expectation that at least the cash flows from operating activities should be positive. Alternatively I would be happy that the company has extra monies to distribute dividend or invest and expand its business strategy.
3. Growth: keep an eye on its quality growth where the it's earnings are increasing and compliment the ROE as in point 1.
4. PE ratio: setting price not more than 20 times earnings; a good business does not necessarily measured by a super high PE ratio
5. Dividend yield: as long it is comparable to FD interest rate but have to take note to avoid dividend trap companies

Of course, the simplest way is passive investing via etf $S&P 500 Index(.SPX.US)$ $Dow Jones Industrial Average(.DJI.US)$ $Vanguard Long-Term Corporate Bond ETF(VCLT.US)$ $Vanguard Total Stock Market ETF(VTI.US)$ $Invesco QQQ Trust(QQQ.US)$ which the risks are diversified and they will revised their basket. Good luck in investing 🍀