I often receive a lot of questions about “what stocks to invest in.” Personally, instead of telling people what to do, I prefer TEACHING them how to do it.
In this post, I’d like to elaborate more on how I personally approach stock investing.
I’ll go over some of the core strategies that have worked for me for well over a decade.
Let me know if any of the strategies resonate with you.
And here we go…
#1. I stay away from investments I do not understand.
To be completely transparent and clear I stay away from penny stocks, the FOREX market, Marijuana stocks (at least for the time being), and pretty much anything that I don’t fully understand and/or that appears too risky.
If I invest in something that starts making me anxious, worried, or concerned about what will happen to my money, that is not the type of investment that is worth my peace of mind.
#2. I stick to companies that have a solid track record of profitability and success.
I really love investing companies that are internationally recognized, have strong brand power, and a “cult-like” following when it comes to customers. I also like to make sure I can see that company growing and thriving for many years to come.
#3. I stay away from IPOs
Personally, I do not invest in Initial Public Offerings (IPOs). An IPO is the name given to stocks of a company when it first becomes public.
If I am remotely interested in a company that is becoming public, I wait at least a year (often longer) and observe the business from a distance in order to see how it performs. I also want to see if the company is profitable at all or not.
If a company is going to be successful and thrive for years to come, you can still make a whole lot of money even if you wait things out.
#4. I like strong leaders and prefer businesses with very minimal (if any) competition.
Most of my portfolio is composed of strong leaders in various industries across the board. If I am invested in a particular company and see a lot of “copy-cats” emerging out of nowhere and also growing market share in a said industry at a fast pace, that is usually one red flag for me to get out. This is especially relevant when it comes to consumer services.
In a nutshell – I try to stay away from any kind of business where the customer’s main concern is to find the cheapest option and there is no brand loyalty, moat, or competitive advantage.
#5. Healthy Financials are Important to Me.
Before investing in anything I like to take a very close look at financial statements. I look into things like sales, profits, cash, and debt.
I also like to take a very close look at the company’s business model and see how it is that it makes money.
There’s a lot of companies out there that are considered “popular”. However, have very poor financials. Those are the type of companies that might be here today and gone tomorrow (or might just make very poor investments in general).
It is extremely important that you look “under the hood” of a business before investing in it for the long term.
And that’s all folks :). Thank you for reading!
What is YOUR personal approach?
Have a fantastic weekend and cheers to profits!
Courses & Resources:
Ready, Set Invest: A Crash Course on Being Ready to Invest – I taught this workshop about two weeks ago and it completely sold out. You can still grab the replay plus ALL bonus materials by click here.
Stock Investing Bootcamp: Click here to receive details of our Best Seller 5-week Stock Investing Bootcamp for beginners.
Understanding Your Investing Options: Starter Guide for Beginner Investors: New to investing and not sure where or how to begin?! This guide is for you! Check out details here.