Beating the Street
Invest in stocks. They outperform bonds.
Never invest in any idea you can’t illustrate with a crayon.
Buy what you know. If you don’t know, don’t buy.
You should buy a company because you know a lot about it, not just because of the price.
The key to making money in stocks is not to get scared out of them.
Consistent dividend growth is one of the most reliable predictors of future growth.
The S&P500 is dominated by corporate giants, the DJI is heavily weighted in cyclicals, while NQ and R2K are filled with smaller, emerging growth names.
If you like the store, you’ll probably love the stock.
As a rule of thumb, a stock should sell at or below its growth rate (the rate at which it increases its earnings each year).
A company with a high P/E growing at a fast rate will usually outperform a company with a lower P/E and slower growth rate.
When looking at a balance sheet, all the assets minus the liabilities is what belongs to the shareholders.
When inventories are allowed to build, it can overstate a company’s earnings.
When the analysts are bored with a company, it’s time to buy.
When a company can earn back the price of its stock in one year m, you have a good deal on your hands.
A healthy portfolio requires a regular check up.
As a stock picker, you can’t assume anything, you have to look at the fundamentals of the story.
Investors need to get the answer to two basic questions:
- Is the stock still attractively priced relative to its earnings?
- What’s happening in the company to make earnings go up?