I have this investment formula that works. It's not that hard to understand, but it does take some courage to execute.

This formula dictates that individual stocks should be bought only when certain conditions are in place:

  • The stock has had a large price decline.
  • It trades at a compelling valuation.
  • It has decent fundamental news.

Clearly, the hard part is buying after a large price decline.

I've used this process successfully for more than 20 years. Many of the individual stock mentions I've made on this site have fit that model. In the past four years, many of them have been huge winners, and hopefully some readers have benefited from them.

That said, the process does not work all the time. After all, no method is foolproof. However, my mistakes have been quite modest compared to the victories. That's the other side of this discipline: When it's wrong, I usually don't get creamed. You won't encounter many Rackable Systems ( RACK) with this discipline.

After the relentless rally since last summer, my buy screen has dwindled, and I can't get stocks to fit the "down big" parameter. Yet, recently a decent quality tech stock hit my screen. As the cheapest tech stock on the planet, I think it merits a look.

The name of the company is Komag ( KOMG), and it's a leading independent supplier of media to the disk-drive industry.

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