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Selecting Good Investment Stocks In a Nutshell

Selecting Good Investment Stocks

In a Nutshell

By

Mario V. Farina

 

Copyright 2016 Mario V. Farina

Shakespir Edition

Shakespir Edition, License Notes

All Rights Reserved

 

No part of this book may be reproduced or transmitted in any form or by any means,

Electronic or mechanical, including photocopying, recording or by any information

Storage and retrieval system, without prior written permission of the author.

 

Correspondence may be directed to:

Mario V. Farina

Email: [email protected]

 

 

This book teaches the method that the author has used to select good investment stocks. He has been investing successfully in stocks for over fifty years and has written several books on the subject.

 

First, a few words about how not to select stocks. The author suggests you ignore what others are saying about good stocks. Make your own decisions. Do not listen to tips. Those gratuitously giving you tips may have their own reasons for doing this. Ignore phone calls which purport to give you inside information. If callers had inside information, why would they be letting you in on it?

 

The seller believes buying good stocks for the long term is one of the best ways to invest. He felt this way over fifty years ago and has not changed his mind.

 

Beginning Steps

 

First, open an online account with a good online stock broker. Use the internet to find names of brokers. If you don’t want to take the trouble to do this, use either Fidelity or Schwab. From personal experience, the author has had satisfactory service from these companies. Talk to a human at your company and tell the person that you are a beginner and want to invest conservatively in stocks for the long term. Tell the person that you want to purchase only the best stocks. You can mention the author of this book if you wish. He has accounts in both companies mentioned above.

 

Tell the individual that you will be asking many questions at first. You will want to know a great deal that this little book doesn’t address. The person will tell you that he or she will be happy to do this.

 

Selecting the Stocks

 

01. Select a company that you believe is a good company. That company may be General Electric. The author believes this is a good company, but is not recommending it. It’s an example for this book. You will find additional stock names at the back of this book that that author believes are also good stocks. The name of the company you select should be a name you recognize. Ignore stocks you’ve never heard of.

 

02. Check to see if the stock is a member of the 30 Industrials in the Dow Jones Average. (General Electric is a member). Not all stocks in this average are good. Not all good stocks are in this average. The author simply feels that this is a good place to start. Call your broker if you want a complete list of all the 30 stocks in the industrial average are.

 

03. Check the stocks Price to Earnings ratio (P/E ratio) is. It should be between 15 and 30 is. Reject the stock if it’s not within this ratio. Don’t worry that you might be giving up a good stock. There are lots of other stocks you can select from. It the stock is almost within this range and you like it a great deal, it’s OK to accept the stock. The P/E of a stock is a better measurement of the value of a stock than the price is.

 

04. Check to see if the stock pays a dividend that is between 2-1/2 and 4 percent. You can be lenient with this requirement is you like the stock a lot. If you don’t know what a dividend is, ask your broker.

 

05. Make sure the stock pays a dividend every three months. This is a strong requirement. If it only plays a dividend once in a while, or randomly, reject the stock. In the author’s opinion, it’s not one you should begin with.

 

06. Check to see if the stock has a good record of earnings increases year after year for a long time. A poor year can be excused but the overall record should be good. You can do research about earnings in you online account. If you need to, ask your broker how you can find out what a stock’s earnings have been.

 

07. Check to see if the stock has a good record of increasing earnings and increasing dividends. A long records of increasing earnings and dividends is a very good signal. Don’t be too rigid. If the record has not been good for a year or two, you may accept it if other measurements are good. See if the stock has “split” several times over the years. This is also a good signal. If you don’t know what “split” means, ask your broker. You can also do your own research in your online account.

 

These are the important criteria that the author uses when he selects a stock to purchase. There are others that you might want to use as well in the future. For example what is the stock’s PEG? How is the management? What is the Assets to Liabilities ratio but you can learn about these as time goes by.

 

 

Disclaimer

 

You should understand that stocks go up and stocks go down. The author believes that over the long term the trend is up. Do invest for the long term. You’re not going to become rich in a few years by investing in stock. But you have a good chance for this over the long term.

 

The author is not a mind reader. He will give you the names of several stocks that he believes will grow in value over the long term and pay a good dividend while doing this. However, he cannot guarantee anything. If a person states that he or she is going to make you rich if you let him or her invest for you, do not believe it. The stock market lives a life of its own. Its actions are not always logical. When you invest in stocks, you are taking a leap of faith. You are believing that the long term will be successful for you. It has been for the author but he cannot promise this for you.

 

Names of Good Stocks

 

Clorox, CLX

General Electric, GE

Hershey, HSY

General Mills, GIS

Pepsico, PEP

Coca Cola, KO

Johnson and Johnson, JNJ

Proctor and Gamble, PG

Philip Morris, PM

Atria, MO

Kraft Heinz, KHC

AT&T, T

Ford, F

 


Selecting Good Investment Stocks In a Nutshell

  • ISBN: 9781310768293
  • Author: Mario V. Farina
  • Published: 2016-02-29 21:40:11
  • Words: 1108
Selecting Good Investment Stocks In a Nutshell Selecting Good Investment Stocks In a Nutshell