Stock Picking Rules
- Confine stock purchases to companies that appear able to sustain above-average earnings growth for at least five years. Growth increases, earnings, dividends, and likely the multiple the market will pay for those earnings.
- Never pay more for a stock than can reasonably justified by a firm foundation of value. No perfect measure, but look at how stock trades relative to market and growth potential. Avoid stocks with many years of high growth priced in.
- It helps to buy stocks with the kinds of stories of anticipated growth on which investors can build castles in the air.
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A classic guide that blends history, economics, market theory, and behavioral finance to offer practical and actionable advice for investing and achieving financial freedom.
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For the Defensive Investor
Once you have your capital, invest 50% of it into bonds or an index fund (depending on market conditions) while the other 50% to be invested on individual stocks.
However, when investing on individual stocks make sure of the ff:
- avoid small cap stocks unless they're diversif...
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