Block 25: Where to Start Looking
To the point, the best place to start looking for investment ideas is companies you are already familiar with. Do you work in healthcare and is there a fancy new drug or robot that does surgeries? Where do you get your groceries? What websites do you use the most often? What brand of shoes do you love? What subscriptions do you enjoy? This can be part of your edge.
There is a book named “One Up on Wall Street,” by one of the greatest stock-pickers of all time named Peter Lynch. This was his whole premise; that everyone has a leg-up on Wall Street because we can see the trends before they can. And it’s pretty true. It just takes some intentional observation. Notice the world around you. Which companies seem to be doing well? Take note of those and then start researching them with some of the skills you have learned. We will go much more in-depth on fostering those skills in just a moment but go ahead, observe the world!
Another method is getting stock tips from some sort of service (like we said the Motley Fool is a good starting place) and then doing your own research. There is also a third method called “screening.” Screening is a tactic for finding stocks by the process of elimination. If you click here, you will find yourself at a stock screener called FINVIZ.
When you “screen” for stocks, you put in criteria that you would like in the potential list of stocks. For instance, let’s say you want to find some quickly growing companies so you put in “over 20%” for sales growth qtr over qtr (quarter). But you also want the companies to be profitable so you toggle net profit margin to “Positive > 0%.” Then the screener will spit out a list of companies that fit those criteria. You can play around with it and find companies that fit your edge. So once you find a potential investment, what are the next steps to see if it is a good company?...