Do you think price is the most important thing when you buy a stock? In practice, most people who fixate on the share price lose money. I used to be one of them: I looked at the price first and barely asked what the company actually did. It cost me years of detours and a lot of tuition.

Then I read Duan Yongping’s investing Q&A, and it clicked. What matters most is the business model, then the corporate culture, and only then the price.

Sixteen years of investing have confirmed one hard truth for me: buying an average business cheaply delivers far worse long-term returns than buying an excellent business at a fair price.

So next time you invest, do not start with the price. Look at three things:

  1. How does this company make money? That is the business model.
  2. What does management say, and what do they actually do? That is the culture.
  3. Price — last. A good company at a slightly higher price beats a bad company at a bargain price, by a wide margin.

What matters most in investing? Nine words: good business, good management, good price.