just trying to see what are best stocks to invest. before you invest read david swensen's book
unconventional success
and the Buffetology by Mary Buffet or other books about warren buffet
It is hard to invest in individual stocks successfully, but as a ageneral rule you will do better in companies that have been successful for a long time, with continual steady increase in profits at reasonable price relative to cost
You can get a good idea of what these stocks are by going to the library and looking at value line, the charts show the price of stocks and the earnings year by year on a graph, at a quick glance you can see most companies are flat or rise very slowly or go up and down frequently over the years on all indices,
but some increase steadily in earnings, and price
These are the ones to buy when the price is right,
Calculating a good price to buy is a little complicated--because it involves trying to predict company earnings in the future--based on past, and what the company should be worth many years down the line, but it explained in one of the buffet books, (I think the one by Susan Buffet) . Buffet picks companies along these criteria but buys very rarely--only when prices for these companies are exceptionally good,
uffett's philosophy on business investing is a modification of the value investing approach of his mentor Benjamin Graham. Graham bought companies because they were cheap compared to their intrinsic value. He was of the belief that as long as the market undervalued them relative to their intrinsic value he was making a solid investment. He reasoned that the market will eventually realize it has undervalued the company and will correct its course regardless of what type of business the company was in. In addition he believes that the business has to have solid economics behind it.
The following are some questions to determine what business to buy, based on the book Buffettology by Mary Buffett:
* Is the company in an industry of good economics, i.e., not an industry competing on price points. Does the company have a consumer monopoly or brand name that commands loyalty? Can any company with an abundance of resources compete successfully with the company?
* Are the earnings on an upward trend with good and consistent margins?
* Is the debt-to-equity ratio low or is the earnings-to-debt ratio high, i.e. can the company repay debt in few years from its earnings?
* Is ROE consistent over its history and high compared to the industry average? Is it more than 12%? Or does the company have high and consistent Return on Total Capital?
* Does the company retain earnings for growth?
* The business should not have high maintenance cost of operations, low capital expenditure or investment cash outflow. This is not the same as investing to expand capacity.
* Does the company re-invest earnings in good business opportunities? Does the Management have a good track record of profiting on these investments?
* Is the company free to adjust prices for inflation?
Buffett's next concern would be when to buy. He does not hurry to invest in a business if the value is not discernible. He will wait for market correction or downturn to buy solid businesses at reasonable prices, as he views downturns in the stock market as buying opportunities. He is conservative when greed and speculation is rampant in the market and he is greedy and aggressive when others are fearing for their capital. This strategy is what led Buffet's company through the internet boom and bust without significant damage, although critics have also noted that it may have led Berkshire to miss out on potential opportunities during the same period.
Then he asks at what price is the business a bargain, and his answer typically is when it provides a higher rate of compounded return relative to other available investment opportunities.
Buffett has coined the term "economic moat", preferring to acquire companies which possess sustainable competitive advantages over their competitors.[10]
Warren Buffett's letters to shareholders are a very valuable source in understanding his investment style and outlook. [11]
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Swensen suggests a totally different approach== just simply buy a diverified mix of stock, real estate and other .indices, from Vanguard which is a nonprofit mutual fund company, because its safer and you don't have to pay much attention to it, and your transaction costs (the cost of buying and selling and managing the portfolio are very low)
If you are serious about this you should do some research before you go into it
The worst thing is to try to invest in particular individual stocks
for many reasons, including that uness you have a planned approach that makes sense, you'll buy and sell at exactly the wrong time--
The exception would be companies that you know a lot about because you work in the industry or are a customer,
If you see a company you know about that seems to be doing well you might investigate carefully and buy some of its stock if it meets the other criteria, high growth, steadily increasing profits,
long time in business, good price
Buyt for most people Swenson's approach is probably the best. Long term,
Any company with a high dividend (over 4%) that has an annual increase in stock value is a solid investment. how much you got to spend....
stick to gold (a commodity (precious metal) rather than shares) , its risen a huge amount over last few years.
and if doomsday ever comes it;ll be worth a hell of a lot more than a useless bank note. First you will want to pick a stock that still has room for growth. There are many great companys, but most of many have also peaked out. Also, buy in a market that you're familiar with so you can better judge what you think they're doing is good or bad. Buy Cheap, don't sell early, then count your money. IARV The best investment right now is either Apple, Microsoft, or ExxonMobil.
Apple is at an all time high due to their change in advertising. They are killing Microsoft by about $50 per share.
However Microsoft is bound to return with a vengence because their stock, which is usually $65 per share is only $28 per share right now, hence buy low and sell high.
ExxonMobil is breaking records and you would be buying very high with hopes of it going higher, but if it peaks and falls, then it will do you no good......it probably wont fall. If ya woulda asked yesterday I would have said SCT. Today nothing yet. Check out U.S./NIH research trees to see where science/tech is streaming. Invest a little ahead of it. The truth is if you are not sure as yet then you shouldn鈥檛 be in the stocks trade at all. There are more than 100 internet and television based information bases in the US only about all you can ever want to know about investing especially in stock and etc. If you keep a simple routine of which reliable sources of information you would use and determine an investing plan much like any other business plan for example : investing in gold, energy stocks and etc. I think you should be at least a foot out of the woods. If you find information in chat portals such as yahoo answers is the same as getting an investment tip from a cab driver, its all useless information if you are serious about it. I mean by the time one person tells you what he/she heard a few days ago is probably useless by the time it gets to you via email.
The best strategy is the one you will find out for you own by sheer experience and of course a certain level of luck and many have sad luck favours the brave but I argue that it favours not only the brave but also those who are willing to work hard like reading and learning from scratch.
Good luck you will need it! |
