How to find the best stocks to buy
How to find the best stocks to buy. At the beginning, we seemed to keep finding the best stocks NOT to buy. Having lost money on many investments, we took a step back. What were we doing wrong? We couldn't put our finger on it.
We had to change things up. Listening to brokers and rumours were not working. We started looking back in history. Which investors did learn how to find the best stocks to buy. How did these investors do it? What were there investment techniques?
We focused on two investing legends; Warren Buffett and Benjamin Graham. We found that they built there strategy using one fundamental method; Value Investing.
What is Value Investing
Value investing is finding strong companies at attractive prices. But why would a strong company be available at an attractive price? The most common reason is short term profit disappointment. If you can prove that the respective company is in a healthy position and the short term profit drop is merely a blip, you may find yourself with an opportunity to buy a strong company at an attractive price. Short term volatility is what creates opportunity for the long-term investor.
We had finally found an investing method that was logical and based only on facts, not rumours.
What makes a company a great investment
A consumer monopoly is a company that has either:
- A brand name product, a key service, or some attribute that makes people or businesses dependant on the company
Given these characteristics, a great company should have:
- Strong earnings that show an upward trend
- Huge amounts of cash with little or no long term debt
- A high rate of return on shareholders’ equity.
This changed the way we invested. It would be impossible to lose money on the stock market if you invested only in consumer monopolies. Consumer monopolies were the best stocks to buy. Warren Buffett once said - “Diversification is something people do to protect themselves from their own stupidity”. He was spot on. When you find a good company at a great price - buy. It will be a winner.
We put all our years of research and experience into one strategy. We have made this available for free to stop you making the same mistakes we made. Our free value investing guide will teach you how to find the best stocks to buy.
Help us on our journey - share our free value investing guide and our value investing educational site stockpickingjunkie.com.