When you’re looking to add new stock, first evaluate whether the company has ample room for growth. Look for small companies that have the ability to conceivably grow rapidly for many years.
If their market is already saturated and its products have already been around a while, like steel and automobiles, the company can’t possibly keep growing at 30% a year for a decade or more.
The P.C. revolution gave Microsoft lots of room to grow. With mainframes going out of style and personal computers needed for the home and office, it was apparent MSFT was going to keep growing. Everybody was going to have a computer. I should have owned MSFT during the 90’s, but didn’t.
I missed out on eBAY (EBAY) during this time frame because I wasn’t aware of the growth opportunity the company possessed in automobiles, retail goods, tickets to special events, etc.
