The perfect company - it's the holy grail of the investment world. The company that its initial investment hundreds of times will make over. It's what everyone shoots for. To have bought Microsoft when it first went public ... It's how fortunes are made. What makes "the perfect business"?
The search for the perfect company is not the pursuit of day-traders or market insiders. They are looking for quick and dirty performance. High speed, high risk, high stress. No, the perfect company is more along the lines of what an individual investor - like you or me - would look. I do not want to have my hand on my mouse until the closing bell just to make sure I do not lose my shirt. I want to buy a position in a company and know that no matter what today or tomorrow, eight months from now so will my portfolio be worth more than today. I'm not talking about a laissez-faire approach to investing - far from it. What I'm talking about does take an investment of time and, in the research, understanding the ins and outs of a company, but one that will be paid off in spades.
That is an approach that I have taken seriously (guess what, we're talking about money here), and that I feel makes the market less of a gamble. It is a mantra that has gotten me delivers in the double digits on the Dow to date in a clearly difficult year.
So, you may ask: "What is the perfect company What features should it have??"
One of the most important things - in my opinion - about investing in a business is the feeling that you are a partner. It is essential to know the business inside out. Aware of their products, and all their songs. Above all, you must be excited in the company you are investing in. If not, what's the point? Your gut is an important part of investing. If you are not portfolio gets you going, you might as well gamble in Vegas. At least you'd get free stuff.
The perfect business fundamentals are, well, basic. It is so important to familiarize yourself with the annual and quarterly reports (10-K is your friend) and listen to quarterly conference calls (both can be done very easily online Check out the investor relations website for more information.) . Remember, you're not banking on market psychology, you are focused on profit. Regardless of what happens to a company, or they have juicy profits, their stock price WILL go up. There's no two ways about it. Make sure the company is making money and you will too.
Emotion has a natural role. If you love a company, it can be expected that you will be blinded by that fact when it comes time to sell. A remedy for this is to define a reasonable sell point before you even buy. Too often people look up their positions go beyond their expectations only to see them fall back down what they bought. Take a look at analyst estimates, and other factors (after following the market for a while, the kind of instinctive) to try and determine to sell at whatever happens. A price Just as importantly, do not forget to evaluate a regular basis. Things change, you do not want to miss out on big profits or look in the direction of a share price of the stock will never to. News and economic factors will affect things change your estimates are adequate.
Just as you need to evaluate for a file, you sell point again you often have to evaluate your position in the company itself again. While a company exciting and ideal for you can be when you bought their stock, things change. Maybe the product line that you might not take off. Maybe their visionary CEO retired. Maybe something just does not feel right. Ambivalence has no place in this game.
Do not be afraid to express about the company, your opinion either. You're an owner, however small, and have an obligation to protect your investment. While you may not have the same clout or voting power as an institutional investor, or anyone who measure their equity as a percentage of the company, but sometimes, making your points makes known the difference. Lobby that powerful shareholders of the company, as well as other individual investors. (We'll have more on making your piece heard in an upcoming issue).
If you want to try your hand at speculative, technical trading, this is not the method for you. But if you want to shoot for a combination of excitement and profit, you can look at this a bit. It worked for me. If you can find this to be a particularly rewarding idea.'re A seasoned investor or a newbie willing to learn (through methods that do not need money initially)
Jonas Elmerraji is the founder and editor of growFolio, the world's first free online investment and business magazine. Issues are available online at
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