How To Choose A Stock?

Steve182

maxsteam said:

Steve182 said:

FTSE 100 companies would be the very last place I would look for shares, bar a handful of exceptions

That's a very bold statement. Is there a reason?

Is this a good reason?
The chart does include dividend reinvestment by the way...

JohnWinder

Your enquiry has an aura of youthfulness about it, so I don't wish to persuade you against stock picking as I assume you have not too much to lose and plenty of human capital to yet turn into savings and investments for when you have no human capital left (or none anyone wants or you want to sell).  So, just to say....

Easily accessible markets like USA have plenty of investors thinking hard about what stocks are good or bad buys or sells. When all their information is put together, as happens every moment of the trading day, we finish up with the stock prices as they are. Which pretty much means that every stock is priced accurately according it its value for the future, because owning a stock means sharing in its future good fortunes and so prices reflect the 'group think' on how much you'll get from it into the foreseeable future. In other words, all stocks are similarly cheap or expensive or fairly priced - that's the theory that helped get a Nobel price. If so, for you to get better returns than the whole market can give, you need to be lucky in your stock picking, or have information almost no one else has; while if you're unlucky or don't, you can get below-market returns.

The other issue which probably slightly impacts the price you pay for a stock is that buying only one stock is probably overpaying (for the riskiness of it) compared with buying it as part of a big bunch of stocks. What? When someone buys a fund full of 500 stocks, it hardly matters that one of them goes on to crash and burn; so that person doesn't mind pushing up the price for that stock as they have little to lose, and so the price is bid up to that level. But the person buying only that one stock now has everything at stake and so is less comfortable paying that price set by the less concerned investor. One would be taking more risk with a single stock, and thus paying a higher risk adjusted price. It’s a bad deal. But, you can diversify this risk away by owning shares in more and more companies, thus buying them at a value which better reflects the risk you need to take. You may see flaws in the logic there - let us know.

Voyager2002

alice131 said:

i just started buying Us stocks on Kuvera. i want to invest for long term, so any suggestion on how to choose stock. For now, i mostly pick tech companies like Shopify, Spotify etc, as i believe in those companies as a tech guy.

The USA is so twentieth century. Vietnam is the future.

Johnnyboy11

For ideas, you can have a look at the Top 10 holdings of the best performing fund managers, here's Terry's picks:

https://www.hl.co.uk/funds/fund-discounts,-prices--and--factsheets/search-results/f/fundsmith-equity-class-i-accumulation

[Deleted User]

 alice131.
I think you are doing fine. In broad terms you have identified the area in which you want to be invested for the long term and you know something about the sector. That's further than a lot of investors ever get.

My sense is that you will be too polite to question the patronising, condescending tone of some replies that greeted your debut on the forum; don't take them personally, it's commonplace for this board and, if the authors can't even figure out which side of the world you posted from, what does that tell you about the advice?

One thing: check out the exchange rate charged against your dealings. Remember, you have to pay the commission (if any) twice, when you buy and when you sell. Don't let it put you off buying individual shares though, if you are invested for the long term, factors like the long term direction of your currency against the USD are far more important. This is a good entry point to buy US shares, with $ being relatively weak. Furthermore, you are already in profit on the shares you mention (one of which has a market cap bigger than anything in the FTSE100) and that is the best possible protection against the added volatility that accompanies individual stock holding. Perhaps it's us who should be asking you how to choose a stock.

JohnWinder

ZingPowZing said:

Perhaps it's us who should be asking you how to choose a stock.

It's early days yet with only a dozen or so replies, but we might be heading for that, so I'd be pleased to hear.

Recalling we were asked how to choose a stock (to buy I think), so far I've only got: motley fool tips (which of those do we take?); stockopedia (do they rank them and we take the first ranked?); OXO (what do we do with that?); and a few 'don't bothers'.

Choosing one is more or less half the job. The other half, more or less, is when to sell it. It would be helpful to know that too.

colsten

I think there will be very few investors on this board who are picking their own stocks. Instead, they choose multi-asset funds or trackers which spread the risk and eliminate the need to select and monitor individual stocks.

RolandFlagg

If you are investing for the very long term, don't care about volatility, don't need the money out anytime soon, then Baillie Gifford have the funds you need, especially their flagship Scottish Mortgage fund.

[Deleted User]

JohnWinder said:

ZingPowZing said:

Perhaps it's us who should be asking you how to choose a stock.

It's early days yet with only a dozen or so replies, but we might be heading for that, so I'd be pleased to hear.

Recalling we were asked how to choose a stock (to buy I think), so far I've only got: motley fool tips (which of those do we take?); stockopedia (do they rank them and we take the first ranked?); OXO (what do we do with that?); and a few 'don't bothers'.

Choosing one is more or less half the job. The other half, more or less, is when to sell it. It would be helpful to know that too.

As I say, the opening poster has the right strategy (in my opinion). 
Start with the sector you believe in - tech - identify the best market to invest in them - Wall St - and choose one or two. Don't buy a diverse bunch to start, it's easier to add than to subtract. 
As you rightly say, JohnWinder, the current price is always the "right" price, so don't wait for an auspicious day to take the plunge.
As the stars incline, you may get off on the right foot, Shopify is up 174% over the past year, Spotify 131%.
And now you're in a great position. 
Going forward, much better prepared, to weather the volatility that comes with holding a poker hand of stocks, rather than a fan card of funds.

alice131

thanks to all of you guys, as this was my first thread, i didn't expect much responses. Some of the responses has some very good valid points, and i will try to keep those in my mind. I am just 25, and i just started investing 10% of my monthly income directly to stocks, as that money is not going to affect me even if it's lost. I don't know i am wrong or right, i just think about the company vision for future before buying any stocks.

For example: Spotify: we are moving from a free internet to subscription based services like prime video, amazon prime, news website subscription etc. So i have this feeling that in 5 to 10 years we will see most of the companies will offer subscription based services, and even some will only offer subscription based services. Subscription based model are much more powerful than ads driven business. Because if you buy the subscription of spotify and you really like it then you are going to stick with them for long term. and there are so many reasons.

I am not the expert, i just focus on the vision of the  company who are doing good in my sector of expertise.