How to Find Great Companies to Invest In
Stay within your circle of competence., Focus on a few industries or markets., Stay up to date on news within that industry., Plan ahead.
Step-by-Step Guide
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Step 1: Stay within your circle of competence.
If you have a field of expertise, you may be best able to identify quality within that area.
Experience can provide you with the insights you need to make more informed choices.
For example, if you work in retail, you may be better positioned to determine if you should invest in companies like Walmart, Target, or Best Buy, than you are in evaluating the latest bio-tech company.
Having competence in a certain area doesn't have to come from workplace experience.
If you're a techie who spends his time buying and reading about the latest gadgets, you can draw on the information you obtain to help you make decisions on how to invest in the technology sector. -
Step 2: Focus on a few industries or markets.
These can be either your direct area of competence or other areas that you are interested in investing in.
The important thing is to realize that you can't keep track of everything going on in the global economy.
Large financial institutions have whole departments for doing this so don't think you can do it on your own.
Instead, narrow your focus to include only a few key industries or markets.
This doesn't mean you should avoid focusing on individual companies.
You should always investigate every company you plan to invest in individually., Examples of quality sources for this are online finance websites like Bloomberg and the Wall Street Journal.
They'll give you up-to-date information on many of the goings-on in various sectors of the economy and the World.
Again, focus your energy on a few key areas and become knowledgeable on the happenings in them.
Look for things like trends, mergers, acquisitions, relevant legislation changes, and any global events that may affect your chosen market. , Identify a company that you think stands to benefit from some change or trend in the market.
Look ahead for when this change will take place and move around your money to prepare to invest in the company.
For example, if you think that a new product being released by your favorite tech company is going to be a huge success, you may choose to invest in the company before the rest of the world realizes this and drives up the stock price. -
Step 3: Stay up to date on news within that industry.
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Step 4: Plan ahead.
Detailed Guide
If you have a field of expertise, you may be best able to identify quality within that area.
Experience can provide you with the insights you need to make more informed choices.
For example, if you work in retail, you may be better positioned to determine if you should invest in companies like Walmart, Target, or Best Buy, than you are in evaluating the latest bio-tech company.
Having competence in a certain area doesn't have to come from workplace experience.
If you're a techie who spends his time buying and reading about the latest gadgets, you can draw on the information you obtain to help you make decisions on how to invest in the technology sector.
These can be either your direct area of competence or other areas that you are interested in investing in.
The important thing is to realize that you can't keep track of everything going on in the global economy.
Large financial institutions have whole departments for doing this so don't think you can do it on your own.
Instead, narrow your focus to include only a few key industries or markets.
This doesn't mean you should avoid focusing on individual companies.
You should always investigate every company you plan to invest in individually., Examples of quality sources for this are online finance websites like Bloomberg and the Wall Street Journal.
They'll give you up-to-date information on many of the goings-on in various sectors of the economy and the World.
Again, focus your energy on a few key areas and become knowledgeable on the happenings in them.
Look for things like trends, mergers, acquisitions, relevant legislation changes, and any global events that may affect your chosen market. , Identify a company that you think stands to benefit from some change or trend in the market.
Look ahead for when this change will take place and move around your money to prepare to invest in the company.
For example, if you think that a new product being released by your favorite tech company is going to be a huge success, you may choose to invest in the company before the rest of the world realizes this and drives up the stock price.
About the Author
Abigail Taylor
A passionate writer with expertise in home improvement topics. Loves sharing practical knowledge.
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