Stock selection

Trading Discussion Trading Lifestyle
#1

Hi guys,

Not sure if this is the right place to ask, but is anyone of you investing in stocks? I would like to diversify a bit and invest part of my capital in stocks (long term), besides currency trading.

Are there any books you can recommend on simple fundamental analysis or selection of stocks to trade? I wouldn’t want to invest most of my time in this, but want to be able to make a well-balanced decision in picking stocks with potential, not to just invest in something blindly or solely based on technical analysis.

I’m aware of ETF’s, which perhaps will be part of my portfolio, but now specifically looking to increase knowledge on individual stock selection.

Thanks for any help.

#2

The financial industry recommend long-term investment in stocks, but that does not produce the best results for investors unless the investments are compounded using dividends, and are multi-decade - and preferably multi-generational.

The best returns from stocks come from buying those about to accelerate. For fundamental methods of selecting these take a look at an old publication called The Zulu Principle by Jim Slater. Slater was an accountant by profession and an expert on company data - I don’t believe he ever looked at a share price chart in his life.

#3

Hi Tommor,

Thanks a lot for the book recommendation, will have a look into that.
Appreciated.

Have a nice weekend.

Br, Peter

#4

My personal strategy for stocks revolves around 2 things; 1) Dividends and 2) Long term consistency. I’ve taken some of the strongest stocks from several different sectors and am investing in those companies on a weekly basis. I’m not really looking at making profits, I’m looking to hold onto stocks that will pay me a dividend on a Q or M basis.

I am not looking for the highest paying dividends either because the company needs to be well established. Google “Dividend Aristocrats” for a list of these proven companies. My Stock portfolio was up 11% last year using this strategy, which was a bit of a surprise, but I wasn’t complaining. I also don’t expect that sort of return either based on this strategy.

For long term growth you can also look at companies listed on the SPX500 or the Dow Jones (or ETF’s like you mentioned). These companies require long term growth consistency for many, many years to qualify. IMO long term, monthly charts are helpful to see which direction they’re going.

Whatever you do, make sure you diversify by choosing a healthy mix of securities in different sectors.

Good luck!

2 Likes
#5

Hi,
The last time I invested in stocks was 43 years ago. LOL

That is not to say “do not invest in stocks”, I just decided that they were not for me. I work at two extremes of the risk spectrum, and am also still consulting for a living, so I can tolerate huge disappointments over decades. Just the way it turned out.

Anyway, I invest in gold and silver (very long term), highly leveraged residential BTL property in the UK, and a very limited amount of crypto currency (less than 5% of portfolio. We have experienced large swings in temporary “wealth” as calculated by conventional methods used by the financial services industry, but I do not believe these temporary wealth indicators cause anything other than confusion for the common man, and I think they are designed to do so to obfuscate the truth that “we all make it up as we go along, including the professionals”. What I believe is an honourable goal is to reduce your risk to financial ruin as you progressively get older. And that you need to have an increasing attitude of patience as you get older.

I have made a lot of good decisions in my life, and I have made a lot of poor decisions in my life, but since I am not bankrupt, I can only conclude that the good ones have outweighed the poor ones, and that is all that matters. I laugh about the mistakes in the past, and the bigger they were the more I laugh about them. I would not change any of the decisions I made in the past if I had the opportunity because they were all made with the same belief system about the future. The one constant thing in life is that there are no constants. Best of luck in your searches.

3 Likes
#6

Great idea to diversify into stocks for the long term! For simple fundamental analysis and stock selection, consider these book recommendations: “The Intelligent Investor” by Benjamin Graham, “Common Stocks and Uncommon Profits” by Philip Fisher, “A Random Walk Down Wall Street” by Burton G. Malkiel, and “The Little Book That Beats the Market” by Joel Greenblatt. Remember to align your investment decisions with your risk tolerance and financial goals. Happy investing!

1 Like
#7

@MattyMoney Thanks for your reply, interesting approach. 11% is a really good return, especially if you have a lot of capital to commit. I’m looking for stocks for the mid-long term that can generate (together) average returns of between 3-5% monthly, this may mean i’m hopping in and out of certain positions, but that’s fine for me.

@Mondeoman I’ve done some stocktrading a few years back, but found more passion with FX. Fully agree that mistakes in a certain sense do not exist as you’ll always find some lessons to learn from it. Are the returns on Gold and Silver satisfactory?

@AnalyticsTrade Thanks for your book recommendations, going to look into it! Appreciate.

#8

Well they do what they say on the tin. I do not think they have beaten inflation, but we did start buying in 1988 at $400 / ounce, and into the early 1990s at as low as $250 / ounce. I am unsure if you can ever say that returns are satisfactory or unsatisfactory, although I do set expectations for each asset class. For gold I expect it to track inflation in the very long term (time horizon > 20 years). For leveraged property I expect it to exceed inflation by between 5% and 10% per year, and for crypto I expect it to exceed inflation by a country mile. I have an ultimate goal to establish a net asset base exceeding 20 years of annual living costs. In reality it is great to have such goals but when stuff like food and energy unexpectedly double in one year, that makes long term goals a little difficult to adjust to. There is always something to mess up your plans. :slight_smile: