To really start investing in the stock market you have to do two things: 1) you need to find good companies, and 2) you need to know how to find their ticker symbols. Both of these things can seem like needles in a haystack at first. If you just look at a list of ticker symbols, you often might as well be looking at hieroglyphs. Finding a good company can feel like trying to find a good friend while shopping at the mall.
I have tried search engines, which nearly every investment site has, but find them very frustrating. I either can’t find parameters that give me any results, or I end up with a list of many options that I sift through endlessly with no yield. The only thing I really get from it is experience researching companies that I don’t care about.
After nearly 15 years of helping my husband with our investing, I have found that most of our purchases result from reading articles. This may seem like a hopelessly broad statement, but when you consider that you can search for specific types of articles, like dividend investing or companies with zero debt, I have found it to be more fruitful than search engines. You can also pretty quickly discern which sources are full of hype or just don’t offer anything of substance, then spend your time visiting websites that more closely match your criteria of evaluation.
While I certainly don’t claim to have thoroughly researched all the web resources or financial journals out there, I thought I might as well tell you a few of the websites and magazines that I end up reading regularly or have found useful in the past. I am not a daily investor nor someone who enjoys being immersed in business talk and forecasts, so these websites have to offer me enough substance to be of value, but do not delve so much into details that I can’t glean what I want. I rarely read a whole article word for word, partly because I end up weeding out companies as I go along and feel no need to read about them further. Happily, the ticker symbols are almost always listed at the first mention of the company in the articles.
1) We subscribed to Forbes magazine for a while. I read a lot of their articles and not only found a few companies worth buying or putting on a ‘watch list’, but I learned some things about evaluating the business world.
2) Motley Fool was one of the first subscriptions we had. There are lots of interesting ideas, but it did seem to border on hyperbole, and was not judged worth long term subscription. Still, we read quite a few of their news articles that are linked to yahoo finance.
3) seekingalpha.com has come to be a solid resource. While the nitty gritty of some of their analysis is above my head, I can understand some of it and I can do my own research using basic criteria that we use.
4) My father introduced me to Investment Quality Trends and I subscribed for the initial, low-cost 6 months. I learned a lot of good things from that, but unfortunately judged it too expensive to continue. Still, the time that I had access to their lists was very useful. Several of our purchases are based on what I learned from them.
5) Using the lists available through my membership to AAII (American Association of Individual Investors) is still fairly new to me, but I’ve gotten some ideas from them. It is also valuable as an overall learning source.
6) One resource that I have come across recently, that gave me some good lists to launch my research, is dividend.com.
The bottom line is that it takes going through quite a few companies before finding a few that we are really comfortable with. It helps that we are becoming more familiar with the process. There are still factors like deciding if it is a good time to buy a particular company, even if it is stable and promising.
It should also be encouraging to know that once you find just one company, it can be a link to many more ideas. Particularly if you research through yahoo finance, you can find a link to ‘headlines’ in the sidebar of for each stock you are looking at. This can be a pathway to interesting and useful articles and news releases. It can seem overwhelming at first, but you learn to weed through the articles and skim them for useful information. I’m sure that other websites have links to news, but we find the yahoo site very easy to use.
Most individual investors do well to keep the total of owned stocks between 20-30. This is like a goal, though, and most beginning investors don’t have the funds to purchase that many at once. However, even for the more experienced investor, that is enough to keep track of, but still gives room for just enough diversification of industries. Keep in mind that those lists of potential stocks could be very useful in the future, as a good jumping off point for more research when you are ready to purchase again.
So, really, it’s not about ‘finding’ a lot of companies, it’s about sorting through as many as it takes to find the good ones. And if they really are good ones, you won’t be looking again all that often.