Who Is Rich Eisinger And How Did He Post 8.36% a Year Since '00?

10. Do you assign a firm price target, and does that always trigger a sell?

When we purchase a stock, we write a thesis report -- basically, four, five, six bullet points explaining why we own the stock. We also assign a confidence level rating of 1 to 5. We don't purchase 1s and 2s. This rating depicts our confidence that our thesis will play out. A company like Expeditors has proven itself; that's a 5.

When a company reaches it target price, we go back and assess what we want to do: trim, sell or increase the target price. With a 5, you're most likely to give the company a longer leash. A 3, you're more likely to take your profits. This actually helps on the other side, too. Believe it or not, we have a stock that goes down or has a problem once in a while. (Laughs.) This helps us go back and reassess if the thesis remains sound.

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