Sign up for a FREE Membership or Paid Membership to access everything else shown here. Lesson A is available without a membership.
The key to managing your portfolio is to understand what each individual stock is truly worth. In this chapter you will learn about ways to think what the stock is worth, compare it to what the stock is now selling for, and determine whether the stock should be higher, lower, or whether it is fairly valued. Featured stock Jos. A. Bank (JOSB).
If there is just one characteristic that separates the best stocks from the rest, it’s high profit growth. To find the no-brainers at the beginning of their huge runs, search for companies, like Dell (DELL), which growing profits rapidly.
One of the best ways to search for the best stocks is to keep an eye out for companies that beat the street. Keeping a lookout for companies like Coach (COH) in early 2000s that beat the street and breakout on the same day lead you to finding the very best stocks in the market.
One way you can beat the market is by owning the best stocks. Another way is to avoid the biggest losers, play defense, and preserve capital by avoiding big losses. By avoiding chip stocks like Texas Instruments (TXN), we reduce risk in our portfolio and hold more dependable stocks.
One of the biggest mistakes I see people make is grading how much their holdings have gone up during a certain time period. In Chapter S we talk about the importance of not timing your stocks, such a Lowe’s (LOW), and easing into returns that are not always consistent.
Holding stocks that don’t fit the mold is a gray area. In this chapter we discuss how not to just dump stocks, like Best Buy (BBY), when they no longer fit the mold.