Stocks

What to Look for in Individual Stocks?
  1. General Long-Term Prospects
    • Go through at least 5 years of company’s 10K forms (www.sec.gov or from company’s website)
    • Be able to answer questions like: What makes them grow? Where are the profits coming from?
    • Look for marathoners, not sprinters
    • What’s their “moat” (competitive advantage)?
  2. Management
    • What’s their conduct like?
    • Are they managers or promoters?
    • Can they admit mistakes and move on?
  3. Financial Strength and Capital Structure
    • How is their cash from operations in the past 10 years?
    • How is their long-term debt compared with their total capital?
  4. Dividend Record
    • The record of 20+ years of continuous dividend payments shows extreme quality
 Annual Stock Returns

-Interesting Facts-

  • Stock returns vary a lot
  • On average stocks lose money 1 out of every 3 or 4 years
  • Expect 1 or 2 severe down markets in your investing career

Image Resource- Viridian Investments

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