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What helps you decide which company to invest in?

What guidelines or hints help you know what companies are any good to invest in?

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Thank you comment icon Read a book by Peter Lynch - One Up on Wall St. it will tell everything you want to know before investing. I have been investing for last 40 years and so far no regrets - made few mistakes and made lot of gains too. Atul Bhankharia
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Paul’s Answer

Hi Cameron:

This is what I have done in the past. I normally look at the long term performance of the company. This includes the price when it went public, and review how it has done both in good economic times and bad.

I also review its current standing. Has it had any complaints, and what its reputation within the investment community looks like.

I would say that I mostly invest in companies that I am interested in, or ones in which I would like to sit on their stock board. This includes ones that sell particular products, which the consumer wants or needs.

This might include things like shoes, clothing products, technology or other items which are consumed or needed by the national population.

I also review its current performance in the last year. If the trend seems to be positive, then I usually look into investing in that company.

I also make sure to check the stock split calendar online at the beginning of every month. This is when certain companies split stocks and provide the shareholder with a larger number of stocks for each individual share that they currently hold. If there is something on the calendar that meets my investment criteria, then I normally invest before the stock split date, to obtain the benefit of receiving a larger number of held stocks after the split occurs. Timing is also important in my opinion. I always invest in companies, when their price is low, with the intent of selling the shares when they recover and reach higher levels. Thus making the maximum profit compared to my investment. I also monitor the S&P 500 and the NASDAQ closely for potential company stock purchases which will positively benefit my portfolio

So this is some of the investment philosophy that I follow in regards to maximizing my portfolio. I always recommend to invest and hold those company shares for the long term. I have rarely seen any day trader individuals do well in regards to attaining wealth.
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Hannah’s Answer

A simple way to decide is to start by investing in companies that you already know and trust. For example, if you are currently a loyal Target customer or you really like Apple products then start investing in those companies first. You can expand your portfolio over time, but start off with the companies that you already like.
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Maggie’s Answer

I have subscribed to The Motley Fool (fool.com) for over 20 years.
The company's focus is: Making the world smarter, happier and richer through expert investment guidance.
I have learned a ton, relied on their advice, invested according to their guidance (they do deep dive analysis on hundreds of companies) and have been extremely happy with the results.
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Ann’s Answer

This depends on how much risk you are willing to assume. Individual stock picks can fluctuate wildly. Conventional wisdom is to invest in index funds that track the market, like the S&P500 because over a long period of time they outperform even the most seasoned investor. The key words here is "over a long period of time". Don't invest money unless you are prepared to leave it in for +5 years. Yes, you can get short term gains by playing on the volatility of the market but you also expose yourself to loss.
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Kevin’s Answer

If your goal is financial return you're better off just going with index funds (Vanguard has some really popular ones that you hear about everywhere in the personal finance world). Unless you're going to be really serious and diligent about picking companies (or if your main investing goal is something besides financial return), avoid trying to pick individual company stocks to invest in.
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Sean’s Answer

Determining what investments to make should, most often, depend on what your investment objectives are. Generally speaking, most investments that you make will be long-term investments, though you may sometimes have short-term (e.g., 2yrs) investment goals as well. For long-term investments, I like to consider how valuable I think the company is, as well as how valuable the industry that they're in is, and if it looks like it both will continue to grow. It's also important to consider how the company ranks in comparison to their competitors and how this has evolved over time. Other things to consider:

- How much money can you invest: only invest what you can reasonably afford to lose.
- Goals: "I want to make a relatively quick profit and am ok with assuming the risk of losing all the money I invest." vs "I am investing for retirement and am ok with a modest return that is compounded over time."
- Education and learning: as you're growing your investing experience, make sure to also invest in your education about money. There are many great books out there for beginners that will serve as a solid foundation of understanding money and investments.
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Geoffrey’s Answer

Learn Fundamental Analysis to learn what companies to invest in. Then learn Technical Analysis to understand when to invest in those companies. Fundamental Analysis is the study of things like balance sheets, cash flow, etc. Technical Analysis is the study of market timing using charts and trends. Both are generally necessary to be an optimal investor/trader. Finally, I'd add that have some basic understanding of Economics is important as well to understand the interactions between various markets and the Fed.
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