You don’t buy stock in a giant such as Coca-Cola expecting to quadruple your money in two years. In certain markets they perform well, but you’ll get your biggest moves in smaller companies. How big is this company in which you’ve taken an interest? Specific products aside, big companies don’t have big stock moves. The size of a company has a great deal to do with what you can expect to get out of the stock. What you’ve got so far is simply a lead to a story that has to be developed Just because Dunkin’ Donuts is always crowded or Reynolds Metals has more aluminum orders than it can handle doesn’t mean you ought to own the stock. However a stock has come to your attention, whether via the office, the shopping mall, something you ate, something you bought, or something you heard from your broker, your mother-in-law, or even from Ivan Boesky’s parole officer, the discovery is not a buy signal. Only invest what you could afford to lose without that loss having any effect on your daily life in the foreseeable future There’s nothing wrong with getting paid interest, especially if it is compounded Investing in bonds, money-markets, or CDs are all different forms of investing in debt-for which one is paid interest. Why wait for the Merrill Lynch restaurant expert to recommend Dunkin’ Donuts when you’ve already seen eight new franchises opening up in your area? The Merrill Lynch restaurant analyst isn’t going to notice Dunkin’ Donuts (for reasons I’ll soon explain) until the stock has quintupled from $2 to $10, and you noticed it when the stock was at $2 If it’s not cars you know something about, you know something about something else, and the most important part is, you know it before Wall Street knows it. Visiting stores and testing products is one of the critical elements of the analyst’s jobĭuring a lifetime of buying cars or cameras, you develop a sense of what’s good and what’s bad, what sells and what doesn’t. The nice thing about investing in familiar companies such as L’eggs or Dunkin’ Donuts is that when you try on the stockings or sip the coffee, you’re already doing the kind of fundamental analysis that they pay Wall Street analysts to do. These are my notes which I intend to go back to later. It is not a complete summary of the book. Later I turn those highlights into a blogpost.
Note: While reading a book whenever I come across something interesting, I highlight it on my Kindle.
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