Hello Fools!I've been a SA member since January 21, and I've so far build a portfolio of about 14 stocks. Some are SA's recommendation, some are not and were either found through other means.I'm not an expert and my knowledge in investing is built from reading << One up on WallStreet>> by Peter Lynch and free internet articles. What I understood and kept from the book on how to analyse companies is quite different then when I look at the SA recommendations of companies (profitable company with small PE, while the SA's recommendation do tend to not be profitable yet or their PE have seriously busted the sky). I've been initially hesitant to buy SA's recommendation based on this.6 month later, I do tend to see more return on my investments from the SA service than what I myself picked, which makes me want to trust more the service. My question here is as follow: What are you fools looking at when deciding if to buy or not a Stock Advisor's recommendation? Usually, the recommendation already come with a fair amount of company's description, revenue, leadership, forecasted growth potential, etc. So what else do you do? Even if I do open up a financial statement, the key information is already laid out in the recommendation so except going over their website and looking at what they do (already laid out by SA) I'm not too sure what factor should be influencing my decision to invest in company recommended by SA.Any help is appreciated. Thanks Fools
When you subscribe to a service, you need to trust their recommendations. If not, you are in the wrong service.Presumably you are a growth investor looking for increased value mostly through earnings growth.If resources are limited so you can't invest in all recommendations, you probably should base your choices on odds of success. Is the company profitable? When will they be profitable? What is the price earnings ratio. How large are debts?The bottom line is do you believe their growth plans are likely to succeed. In time you will learn what matters in your case.Otherwise flip a coin. No easy answers.
"When you subscribe to a service, you need to trust their recommendations. If not, you are in the wrong service."Paul,That's a shrewd point. But you don't go far enough. If one's own due-diligence suggests that an "advisory service" is clueless, they should be loudly and publicly scorned, and beginners should be warned away from the scam the "service" is running. Arindam
Hi, GBM488.First, I need to point out that this is a Public Community discussion board open to non-premium service Fools. Service-specific questions are best addressed to your Service Community discussion boards. Just select your service from the My Services menu, then select Community from the More menu.With respect to P/E, what I would suggest is you need to focus on the context of the metric as much as the value. Why is the P/E high? TMF tends to not be afraid of high P/E numbers if the company in question is pumping cash back into its growth, for example, through R&D or acquisition. The market tends to focus on what a company has done for them lately but Fools try to focus on what a company can do for them over the next 3-5 years (or longer). I cannot offer individual or specific investment advice. Every Fool has to figure out an investment strategy that works best for them.Generally speaking, if you are a Stock Advisor or Rule Breakers member, you are going to get more Recommendations and Best Buy Now opportunities each month than you can reasonably invest in, so don't feel pressured to invest in anything until you are comfortable with your investment decision. In any given month, that could mean opening new positions, adding to existing positions, or holding your cash back for the next month when hopefully you'll like the opportunities better.One strategy would be to focus on the Best Buy Now opportunities which are also Starter Stock companies, followed by the remaining Best Buy Now opportunities, then the remaining Starter Stock companies. Your Analyst Team thinks the active recommendations are good long term, buy-and-hold opportunities.You might want to build a Buy Watch List divided into four categories. First, there are the Must Haves, companies in which you have deep conviction and absolutely want in your portfolio. Second, there are the Strong Haves, companies in which you have strong conviction but wouldn't just totally die if, like, they weren't in your portfolio. The third category is the Nice Haves, companies in which you have positive conviction but aren't especially excited over. The last category is Never Haves, those companies you just flat out think are wrong for you. This way, when the market presents discount opportunities, you are ready with a shopping list. The trick is to already have the list of companies you want to open or add to a position on in advance and then your focus is on the opportunity rather than the market price.One unofficial rule many Fools follow is buying in thirds. Let's say you want to purchase about $2500 of a company. You could buy $1000 now, then another $750 on a future dip in price, again the final $750 down the road when the price is again at a discount. That could be next month, next quarter or even next year.This is a form of dollar cost averaging which can even out your cost basis. Not relevant if your investing through a tax-advantaged account, but important if you are watching your potential capital gains and losses. It also lets you spread the cost of a position over time, which can be helpful if you are adding cash to your portfolio periodically rather than all in one lump sum.In terms of how many positions to maintain in your portfolio, again, there's no hard and fast rule. The goal is to maintain diversity so that your portfolio does not carry too much risk from a single investment. The Gardner Brothers have suggested 15-25 companies is a good, or at least aspirational, starting point. How many total positions and how much you invest in that initial position is just a question of with what you feel comfortable.Tom Gardner has encouraged Fools to own 10-20+ stocks, hold them all for 5+ years and expect 40% of them will lose to the market. Just 10-25% of remaining positions will drive 90-100% of the returns. That last point is why it's essential to diversify, because there is no way of knowing in advance which companies will do what. This is just a starting point, however. Portfolios can grow to as many positions as they feel comfortable managing.One trap many fools fall into is thinking too much about how many shares they own and not enough about the value of those shares. They think they are somehow doing better buying a lot of shares of cheaply priced stocks rather than just a few shares of more expensive companies. But the market price of a share of stock is completely dependent on the total market value of the company divided by the number of outstanding shares. The higher the market value, the higher the stock price. The more outstanding shares, the lower the stock price. However, neither market value nor the size of the shareholder pool is a measure of performance. Regardless of whether you own 1000 shares at $1 per share, 100 shares at $10 per share, 10 shares at $100 per share or 1 share at $1000 per share, you still own $1000 of that company, and if the share price goes up 10%, you've gained $100 any way you split it. If there's a company in which you would really like to invest but is too expensive for your available cash, just wait until you can save enough for a share.Many Fools watch their portfolios daily, hanging on each climb or drop in stock price and wondering what each piece of news means to the market. I like to say invest in companies, not markets. So instead of dwelling on quarterly earnings numbers, focus on how and what management says is happening with the business. When there's a big drop in the stock price, ask yourself whether there was any significant change in the company's operations that triggered or resulted from the market's actions. If not, it may be a buying opportunity.Foolish philosophy emphasizes long term (3-5 years or longer) investing in companies rather than short term trading of stocks. Focus on the company's performance, not the market's performance.Another trap Fools try to avoid is investing emotionally in reaction to significant news or large price swings. Fools try to never make investing decisions out of fear or panic, or unfounded optimism and irrational hope. It's not that Fools embrace risk but that we try to manage it through research and rational decision making. It is said that fools rush in, but Fools invest with purpose.The motto of The Motley Fool is to Educate, Amuse and Enrich. You'll notice that enriching comes last and education comes first. And bridging the gap is amusement. So take advantage of the resources TMF has to offer to learn about investing as you build wealth for the future, and have fun during the process.FuskieWho is throwing a lot at you but thinks the most important thing is for you to embrace and stick to a strategy and to ask lots of questions, because that is how you learn and grow as an investor...-----Premium Home Fool: Ask me a Foolish Question, I'll give you a Foolish Response!Ticker Guide: The Walt Disney Company (DIS), Intuit (INTU), Live Nation (LYV), CME Group (CME), MongoDB (MDB), Trip Advisor (TRIP), Vivendi SA (VIVHY), Mimecast (MIME), Virgin Galactic (SPCE), Axon Technologies (AXON), 51Jobs (JOBS)Disclaimer: This post is non-professional and should not be construed as direct, individual or accurate adviceDisassociation: The views and statements of this post are Fuskie's and are not intended to represent those of The Motley Fool or any other sane bodyDisclosure: May own shares of some, many or all of the companies mentioned in this post (tinyurl.com/FuskieDisclosure)Fool Code of Conduct: https://www.fool.com/legal/the-motley-fools-rules.aspx#Condu...Invitation: You are invited to interactively watch Motley Fool Live online television: https://livechat.fool.comCall to Action: If you like this or any other post, Rec it. Better yet, reply to it. Even better, start your own thread. This is YOUR TMF Community!
GMB writes in partWhat are you fools looking at when deciding if to buy or not a Stock Advisor's recommendation?I don't subscribe to any Fools products.I don't read the funnymentals other than seekingalpha dot com, finding Financials, and look for Total Revenues line and Net income line.The Advisors track record can be beaten. They have a percentage number and I can do better. Let's peruse the following at your leisure as an idea with a Business Plan assuming you have one. If not, create a Business Plan and follow it to a tee. https://boards.fool.com/5591kram-re-business-plan-i-looked-a...Something to ponder,Quillnpenn - a poor church mouse scratching for a living as a Swing Trader for over 45 years.------------ Vision - Multi-Millionaire.....Goal - earn 1.3% - 2.5% compounded Daily
Best Of |
Favorites & Replies |
Start a New Board |
My Fool |