I bought stuff at 3.5 cents once and I thought it can’t go down to zero. It can.

The share price must be less than book value. Preferably it will be less than net working capital less long term debt.

The company must be profitable. Preferably it will have increased its earnings for the past five years and there will have been no deficits over that period.

One of the dangers about net-net investing is that if you buy a net-net that begins to lose money your net-net goes down and your capacity to be able to make a profit becomes less secure. So the trick is not necessarily to predict what the earnings are going to be but to have a clear conviction that the company isn't going bust and that your margin of safety will remain intact over time.

When a stock doubles, sell half - then what you have is a free position. Then it becomes more of an art form. When you sell depends on individual circumstances.

If it is cheap enough, we don't care what it is.

I think that intelligent forecasting (company revenues, earnings, etc.) should not seek to predict what will in fact happen in the future. Its purpose ought to be to illuminate the road, to point out obstacles and potential pitfalls and so assist management to tailor events and to bend them in a desired direction. Forecasting should be used as a device to put both problems and opportunities into perspective. It is a management tool, but it can never be a substitute for strategy, nor should it ever be used as the primary basis for portfolio investment decisions.