How To Choose A Stock?

Apodemus

Sebo027 said:

Interesting point. Then what to do? I would say in the absence of data to determine which stocks will survive or thrive or die in the market, the alternative would be to "buy the market" if one believes that market direction is to be favourable - i.e. tech ETF?

And then my next thought would be, how to identify a market with favourable direction? 

Well, I guess that is where the investor has to rely on wider research going well beyond the company itself - the combination of the company's R&D output, its protectable IP, its product development stream, where that fits with the same list of attributes for potential competitors and to what extent it meets the needs and direction of the market that the products are in. Not for the feint-hearted and even if you get all that right, there is still the potential for a completely disruptive technology to appear from left-field and blow it all away!

maxsteam

Thrugelmir said:

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?

Better value elsewhere.

You mean developing countries? Risk/reward needs to be assessed. I maintain that, for a UK investor, the larger London markets should be the first place to look for investments. Personally I like to think that, if I am investing in a company, I have a possibility of seeing their "bricks and mortar" operation.
A lot of posters in this thread seem to favour US stocks. Measured in terms of index PE ratios, that is one of the most expensive markets and so not a place to go for Value Investing.
It's certainly sensible for an investor who is interested in getting started with share ownership to avoid overseas markets.

JohnWinder

One would miss some of the benefit obtainable by diversification by avoiding overseas markets. Getting started or not, diversification is sensible, although not the better choice if you can pick the winners.

AlanP_2

Personally I like to think that, if I am investing in a company, I have a possibility of seeing their "bricks and mortar" operation.

That is almost becoming a negative factor in today's world.

Still applicable to many companies but not to the faster growing / better prospects ones in the main.

There are exceptions, you can see Amazon sheds across the country for example but they are a miniscule part of the money generating operation and not the valuable aspects.

wmb194

maxsteam said:

Thrugelmir said:

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?

Better value elsewhere.

You mean developing countries? Risk/reward needs to be assessed. I maintain that, for a UK investor, the larger London markets should be the first place to look for investments. Personally I like to think that, if I am investing in a company, I have a possibility of seeing their "bricks and mortar" operation.
A lot of posters in this thread seem to favour US stocks. Measured in terms of index PE ratios, that is one of the most expensive markets and so not a place to go for Value Investing.
It's certainly sensible for an investor who is interested in getting started with share ownership to avoid overseas markets.

Valuation is a separate issue and it's down to each investor to judge but you can do this with plenty of foreign firms, for instance I'm using an Apple iPad to write this comment, when I get back to my PC I'll be using various pieces of Microsoft software and an Amazon delivery will be arriving later today. In the past the issue with investing abroad was the cost and lack of the possibility that British brokers offered but it's never been cheaper and easier than it is today so there's no need to restrict yourself to anything listed in London.

Prism

maxsteam said:

Thrugelmir said:

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?

Better value elsewhere.

You mean developing countries? Risk/reward needs to be assessed. I maintain that, for a UK investor, the larger London markets should be the first place to look for investments. Personally I like to think that, if I am investing in a company, I have a possibility of seeing their "bricks and mortar" operation.
A lot of posters in this thread seem to favour US stocks. Measured in terms of index PE ratios, that is one of the most expensive markets and so not a place to go for Value Investing.
It's certainly sensible for an investor who is interested in getting started with share ownership to avoid overseas markets.

I don't think it matters where the company is listed. Why would investing in Unilever be a preference over lets say Pepsi? Both have offices all over the world and are within the same sector. Sage or Intuit or Xero? Wouldn't the best investment be preferred over the one that happens to be UK based?

Linton

JohnWinder said:

If the current price is always the right price, noted above, and if the price reflects the future returns on the investment, how could any one stock be a better choice than any other stock unless by luck or knowing something that almost no one else in the market knows?  I think it's luck which will give one the result which could be well above market average, well below, or anywhere in between. Which makes it a game for the rich, the young (if they've got plenty of human capital which makes them rich), or the brave.

The "right price" for a mature defensive value stock paying dividends could be calculated as the current value of future returns  in the same way as bonds.  However this calculation cannot be done for growth shares as no-one knows what the future returns will be, any more than they know what the future price will be. So it doesnt really help.

Growth stocks are more likely to be priced on what the average buyer guesses or hopes the future returns will be, with or without any justification.  However I dont see this guess being explicitly stated, never mind backed up by calculation.  Some valuations may be difficult to justify even if the company concerned became the major supplier in its particular business.

So how can a growth investor win?   I would suggest several ways.  One is momentum since growth shares that do well will attract further buyers at least until a major set back when the price crashes.  But in recent times we have seen remarkably few crashes in the Growth  sector.  Another area where a growth investor can take advantage is global long term trends.  China is an obvious example in one direction and fossil fuels in the other.  And a third is that an investor who has good knowledge of a particular sector can gain over the likely majority who dont.

The suggested alternative is The Market.  The problem there is that this has an in-built assumption that larger companies will out-perform smaller ones - why else put so much more money into them?  I see no mathematical justification why this should be true nor any evidence that it is.  If  anything evidence suggests the reverse.

ChilliBob

There's a few ETFS you should look at first in my view, and funds. For example L&G do some good tech funds, there's some general tech ones, some for more ai/data sci flavour, cloud computing, cyber security etc. Perhaps have a look at those, if they contain holdings you recognise and would habe invested in directly then see how you get on via this route to start with. There is a few ETFS focusing on China or Asia tech if that'd your vibe too. 

thickasabrick

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.

I'm not really an individual stock picker myself.

Doesn't stop me researching individual shares which is how I came across this US based blogger, Mr Tako Escapes. 

Quite enjoyed reading his series on "investing" and "investing ideas" and specifically bookmarked these with regards to choosing individual stocks.

"Story Stocks And When To Buy Them"

"The Lifecycle Of An Investment"

My own risk profile keeps me with the style of investing as described by the likes of Lars Kroijer and JLCollins.  Were you keep the costs as low as possible and try to at least get average returns by investing in global tracker funds.

Steve182

Prism said:

maxsteam said:

Thrugelmir said:

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?

Better value elsewhere.

You mean developing countries? Risk/reward needs to be assessed. I maintain that, for a UK investor, the larger London markets should be the first place to look for investments. Personally I like to think that, if I am investing in a company, I have a possibility of seeing their "bricks and mortar" operation.
A lot of posters in this thread seem to favour US stocks. Measured in terms of index PE ratios, that is one of the most expensive markets and so not a place to go for Value Investing.
It's certainly sensible for an investor who is interested in getting started with share ownership to avoid overseas markets.

I don't think it matters where the company is listed. Why would investing in Unilever be a preference over lets say Pepsi? Both have offices all over the world and are within the same sector. Sage or Intuit or Xero? Wouldn't the best investment be preferred over the one that happens to be UK based?

I'm not sure that's entirely true. Whole countries come in and out of favour. Look what happened to the UK after 2016 Brexit vote. Today the FTSE100 is at almost at exactly the same level as it was in June 2016. Shares in comparable S & P 500 index companies are trading on significantly higher multiples. You may see that difference as a positive if you are investing in the UK now, but you would feel very differently had you invested 5 years ago.