How to choose stocks?

Qualitative analysis

Whether you're a humble private investor, mutual fund manager, day traders, or even a broker, you need a strategy for choosing stocks. There is no universal strategy that works for every investor, and sometimes a combination of different strategies can give better results. We will show you various strategies for choosing future actions.

Qualitative analysis

Fundamental analysis has a very good possibilities. Under the fundamental analysis covered a variety of indicators and the relationships that determine the value of the company, accounting for overall quality of the firm. In the 1 part we consider qualitative factors when choosing the necessary action.

The successes of companies such as General Electric and some other blue chips are amazing. Since its founding in 1878, GE has managed to become one of the most successful companies in history. 1 share of GE in 1892 would have cost as much as 4.602 shares today (over $ 250,000). The main reason for the striking success of GE - the history of numbers.

Management

Strong management - the essence of any successful company. We can not say that the collective workers is not important, but that management ultimately makes strategic decisions. One good indicator here - to see how long the CEO (Chairman of the Board of Directors) working for the company. In the case of GE, its CEO Jack Welch has held his post for 20 years. Second, check out how she felt the company and stock price over the years that he / she has headed the board of directors. If the company "restructure" it probably means that management has trouble.

Industry / Competition

Market share - another important factor that you should pay attention. For example, in the battle between the soft drinks industry, Coca-Cola and Pepsi. Anyone who tries to enter this market, will face daunting competition from these firms. On the other hand, GE is extremely diversified, taking up a lot - from the NBC-SI to its traditional business - selling light bulbs.

Barriers to entry are extremely important. A classic example - the restaurant industry. Anyone can open a restaurant. Compare this to the automotive and pharmaceutical industries. Both are massive barriers to newcomers. They may take the form of large capital investments, exclusive of distribution channels, government regulations, patents, etc. Competition more difficult, more difficult to enter the market, the distinct advantage of already existing firms.

Trademark

Ask yourself "Does this company unwound a trademark?". This is an important competitive advantage that is worth considering. Coca-Cola - the most popular brand in the world, and its financial value is enormous. Companies like Proctor and Gamble relies on hundreds of popular brands, such as Tide, Pampers and Head & Shoulders. The presence of the brand portfolio divkrsifitsiruet risk, as one of the drawbacks can be compensated by profits marks of others.

Evaluation of the fundamental / qualitative point of view and determine whether you should invest in its capital, as important as the look and the sales and income. This strategy can be one of the easiest to use, but it's also one of the most effective ways to evaluate potential investments.