1) A stock represents part ownership in a business. Stock investors are business owners.

2) In the short run, the price of the stock will often be different from the value of the business. Market sentiment does not always match the business reality.

3) In the long run, the performance of the stock will follow the performance of the business. A good, well-managed business will outlive an average business.

1) High quality businesses

2) That are currently selling for a reasonable price

3) And are also likely to do well over the long-term