How to choose actions for investments?Thousands of people worldwide literally hunt for interesting actions which have high potential of growth. Sometimes among this weight “ hunters “ appear so-called “ guru “ having the special method of selection of actions of which they very much are proud. But only the few from these “ guru “ choose the actions which are growing quicker than the market and bringing in the solid income to the owners from year to year. Such people rarity. The majority from so-called “ guru “ finish the life in decline as the grown dull stars, having managed to flash a good choice of one or two actions.
Knowing difficulty of work on search of actions with the solid potential of growth, let`s look how professionals who managed to earn rather big money in stock market thought. For example: Philip Fischer, Peter Lynch, Warren Buffett. It is extremely curious and fascinating to investigate as these “ big guys “ analyzed and philosophized. Choosing actions, they seldom used some special secrets and secrets. Quite often the same pros earned money, telling in the articles and books about how to choose actions. So in what a secret of their extraordinary success in selection of actions? Let`s consider Peter Lynch`s principles.
This American won recognition in the financial world as the managing director of fund Fideliti Magellan. During 13 - ti years he annually tried to obtain on average 28% of profitability on the investments. During this time the fund under its management grew with 18 - ti millions of dollars to 14 - ti billions of dollars. Lynch retired in 1990 - m to year at the age of 46 - ti years. Proceeding from its numerous interviews and notes on financial subjects, councils for actions in newspapers and magazines, to books, it is possible to make a picture about the investor Peter Lynch, how he analyzed and chose actions for investments. Many of its councils are based on psychology.
Council No. 1. All that glitters isn`t gold. the saying, Known among brokers, says: “ steer clear of stocks of the companies which build to themselves monuments and monuments “. Peter Lynch went further away. He considered that the investor has to steer clear and not make investments in stocks of the companies which have many color pictures in the annual report! Choose those actions which business is clear to you.
Peter liked to speak: “ If you love shops or restaurants, then will fall in love also with their stocks “. You learn about the company much, having become her client. So Lynch, for example, attentively observed: where as as members of his family buy, their reaction to emergence of new brands and brands or to a new advertizing campaign. Daily events can tell much more about the companies, than the motley annual report.
Council No. 2. Patience - gold. Peter Lynch considered as One of key qualities of the investor patience. Stocks of the companies can not only grow, but also fall. If the company has the good guide, smoothly running business and a great number of loyal clients, then falling of the price of an action is not something surprising and unusual. It as temperature drop: you just put on yourself warm clothes and wait for warm times. The patience is required to wait for warming. “ Having enclosed in actions, you can lose only 100%, but you can earn 1000%, 5000% and more percent if you are rather patient “.
Council No. 3. Small but precious. “ Nobody can precisely predict the level of interest rates, state of the economy or behavior of stock market “. Give up similar occupations isosredotochtes on studying of the companies in which you invested money. But at the same time it is important to remember that actions, as well as children, it is not necessary to have bigger quantity, than with what you are capable to cope. If investment for you not the main work, then probably is enough for you time to trace no more than 10 companies, making purchase and sale as necessary.
Lynch calls the methods on selection of actions connection of art, science and active work as legs. Special knowledge, curiosity and the known degree of activity are necessary for everyone who wants to make the investments in actions to get and estimate information on the company.