A: Indeed - bond ratings have certainly improved because the companies post consistent earnings year after year. And now, they are paying dividends as well and D.R. Horton, Centex and several others have announced big share repurchase authorizations.

Q:  What is your approach to controlling risk?

A: People make emotional decisions when it comes to investing, but you can control emotion by focusing on what has worked historically - diversifying, buying undervalued stocks and having the patience to stay with them. With our approach you also save on commissions and gains are usually taxed at the lower long-term rate.

We actively follow 1,100 companies. We have three other folks who are involved in the analysis, but we do not spend our time meeting with management nor would I say that we know our companies intimately. Simply put, if you buy companies with inexpensive valuation metrics, you are essentially choosing from a universe of stocks that are destined to outperform. Of course, you will have failures, which is why you have to diversify, but the odds are in your favor.

Q:  What is your sell discipline?

A: We only part with a stock when it has eclipsed its Goal Prices, our determination of long-term, three-to-five year fair value. We like to say that our favorite holding period is forever, but we have sold stocks in short order if they suddenly get hot or if the conditions that justified our purchase suddenly change in a dramatic fashion. Generally speaking, we do give our stocks all the time they need to fulfill their potential and happily our winners have won far more than our losers have lost.