Basics of Successful Investing III

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http://www.profitableinvestingtips.com/profitable-investing-tips/basics-of-successful-investing-iii Basics of Successful Investing III Successful investing comes from learning the basics and refining your skills with experience. In this series of articles we look at the basics of successful investing. In the first article in this series, Basics of Successful Investing I, we noted that the first thing to do is put your financial house in order and then decide why you are investing and how much capital you are willing to put aside in safe investments and how much you are willing to risk in more aggressive investments. In Basics of Successful Investing II we suggested that you start out by investing in companies that produce products and services with which you are familiar. And, if you want to pick other stocks you need to learn what the company does and how it makes its money. Most importantly we suggested that investors learn how to use the concept of intrinsic value in order to decide if a stock is likely to be a profitable investment or not. In this article we consider a practical approach to investing by a person who has a full time job, family and other obligations. In other words what are the basics of successful investing if you have some money but the vast majority of your time is devoted to the rest of your life. Picking Five Stocks It is a good rule of thumb to limit your investments to five stocks, especially if you want to buy stocks when they are cheap and get out if they become overpriced. Likewise you may have had the good fortune to have investing in an exchange traded fund that tracks the S&P 500 and have seen your investment rise in value with the current market rally. But, there is a lot of talk about a possible market correction as the currency rally has gone one for five and a half year with only one pullback of ten percent. There are times when you have not made a profit until you have taken a profit and for the busy person five stocks are enough to watch. If you are busy with the rest of your life you only have a certain amount of time to follow your investments. And following your investments is essential. A successful investor checks his stock portfolio once a week at the minimum. This means checking stock prices but also news that is pertinent to the stock in question. When you receive quarterly and yearly financial reports you need to read them and understand when management is saying about prospects for the future. Margin of Safety versus Story Stocks A successful investor once noted that many investors want a good management team in place for the stocks that they buy. His opinion was that he wanted a company with such strong market presence and such a strong brand name that even incompetent management could not ruin things. That is to say, there is a margin of safety in buying into a brand name like Coca Cola. And there are story stocks.

Transcript of Basics of Successful Investing III

  • 1. Basics of SuccessfulInvesting IIIBy: www.ProfitableInvestingTips.com

2. Successful investing comes fromlearning the basics and refiningyour skills with experience.By: http://www.profitableinvestingtips.com/profitable-investing-tips/basics-of-successful-investing-iii 3. In this series of articles we lookat the basics of successfulinvesting.By: http://www.profitableinvestingtips.com/profitable-investing-tips/basics-of-successful-investing-iii 4. Before We ContinueClick the links below to get yourFREE training materials.Free Weekly Investing WebinarsDont miss these free training events!http://www.profitableinvestingtips.com/free-webinarForex Conspiracy ReportRead every word of this report!http://www.forexconspiracyreport.com 5. In the first article in thisseries, Basics of SuccessfulInvesting I, we noted that thefirst thing to do is put yourfinancial house in order and thendecide why you are investing andhow much capital you are willingto put aside in safe investmentsand how much you are willing torisk in more aggressiveinvestments.By: http://www.profitableinvestingtips.com/profitable-investing-tips/basics-of-successful-investing-iii 6. In Basics of SuccessfulInvesting II we suggested thatyou start out by investing incompanies that produce productsand services with which you arefamiliar.By: http://www.profitableinvestingtips.com/profitable-investing-tips/basics-of-successful-investing-iii 7. And, if you want to pick otherstocks you need to learn whatthe company does and how itmakes its money.By: http://www.profitableinvestingtips.com/profitable-investing-tips/basics-of-successful-investing-iii 8. Most importantly we suggestedthat investors learn how to usethe concept of intrinsic value inorder to decide if a stock is likelyto be a profitable investment ornot.By: http://www.profitableinvestingtips.com/profitable-investing-tips/basics-of-successful-investing-iii 9. In this article we consider apractical approach to investing bya person who has a full time job,family and other obligations.By: http://www.profitableinvestingtips.com/profitable-investing-tips/basics-of-successful-investing-iii 10. In other words what are thebasics of successful investing ifyou have some money but thevast majority of your time isdevoted to the rest of your life.By: http://www.profitableinvestingtips.com/profitable-investing-tips/basics-of-successful-investing-iii 11. By: http://www.profitableinvestingtips.com/profitable-investing-tips/basics-of-successful-investing-iiiPicking Five Stocks 12. It is a good rule of thumb to limityour investments to five stocks,especially if you want to buystocks when they are cheap andget out if they becomeoverpriced.By: http://www.profitableinvestingtips.com/profitable-investing-tips/basics-of-successful-investing-iii 13. Likewise you may have had thegood fortune to have investing inan exchange traded fund thattracks the S&P 500 and haveseen your investment rise invalue with the current marketrally.By: http://www.profitableinvestingtips.com/profitable-investing-tips/basics-of-successful-investing-iii 14. But, there is a lot of talk about apossible market correction as thecurrency rally has gone one forfive and a half year with only onepullback of ten percent.By: http://www.profitableinvestingtips.com/profitable-investing-tips/basics-of-successful-investing-iii 15. There are times when you havenot made a profit until you havetaken a profit and for the busyperson five stocks are enough towatch.By: http://www.profitableinvestingtips.com/profitable-investing-tips/basics-of-successful-investing-iii 16. If you are busy with the rest ofyour life you only have a certainamount of time to follow yourinvestments.By: http://www.profitableinvestingtips.com/profitable-investing-tips/basics-of-successful-investing-iii 17. And following your investments isessential. A successful investorchecks his stock portfolio once aweek at the minimum.By: http://www.profitableinvestingtips.com/profitable-investing-tips/basics-of-successful-investing-iii 18. This means checking stockprices but also news that ispertinent to the stock in question.By: http://www.profitableinvestingtips.com/profitable-investing-tips/basics-of-successful-investing-iii 19. When you receive quarterly andyearly financial reports you needto read them and understandwhen management is sayingabout prospects for the future.By: http://www.profitableinvestingtips.com/profitable-investing-tips/basics-of-successful-investing-iii 20. Margin of Safety versusBy: http://www.profitableinvestingtips.com/profitable-investing-tips/basics-of-successful-investing-iiiStory Stocks 21. A successful investor once notedthat many investors want a goodmanagement team in place forthe stocks that they buy.By: http://www.profitableinvestingtips.com/profitable-investing-tips/basics-of-successful-investing-iii 22. His opinion was that he wanted acompany with such strongmarket presence and such astrong brand name that evenincompetent management couldnot ruin things.By: http://www.profitableinvestingtips.com/profitable-investing-tips/basics-of-successful-investing-iii 23. That is to say, there is a marginof safety in buying into a brandname like Coca Cola. And thereare story stocks.By: http://www.profitableinvestingtips.com/profitable-investing-tips/basics-of-successful-investing-iii 24. This is often the case with aformerly mismanaged companythat has new management.By: http://www.profitableinvestingtips.com/profitable-investing-tips/basics-of-successful-investing-iii 25. Read their reports and there isalways a story about how thenew team is going to whip thecompany back into shape.By: http://www.profitableinvestingtips.com/profitable-investing-tips/basics-of-successful-investing-iii 26. Then continue to follow the stockprice, financials and the story.By: http://www.profitableinvestingtips.com/profitable-investing-tips/basics-of-successful-investing-iii 27. If the story turns out to be thetruth you will be making moneyand if the story is just a story youwill see losses and it will time toget out.By: http://www.profitableinvestingtips.com/profitable-investing-tips/basics-of-successful-investing-iii