Sunday, April 8, 2007

Investing in Stock- a summary

I hope you noticed a few things about my list of what I look for in stock investing:

  1. The non-technical factors outnumber the technical factors- at the end of the day, its all about the KISS principle with me. If a company is doing well on main street (the non-technical analysis), the technical analysis, as a general rule (there's always exceptions), should follow. For example, when was the last time you shopped at the Gap? I have not bought a lot there for years compared to the 1990's and neither have a lot of my friends and family (how many khaki's can a guy have?). Look at Gap's stock price- its really struggling.

  2. My technical factors focus on cash- how much its paying out in dividends, how much free cash it has and how well it makes use of investor's cash. I readily admit that this is influenced by what I do. Businesses with more cash perform better than businesses with less cash (the painfully obvious observation of the day!). Think of your house-hold: the more free cash you have, the greater your options right? Its the same with publicly traded stock-the market rewards companies that knows how to generate and pay out cash.

  3. There is no rocket science involved in my analysis. Anyone can apply these factors. Do not let the investment industry fool you into thinking you cannot do this.

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