Financial Mail on Sunday Complete Guide to Investment by Andrew Leach

Author:Andrew Leach
Language: eng
Format: epub
ISBN: 9781448149414
Publisher: Random House Business

CHAPTER 8

Tricks of the Trade and the Value of Information

INVESTORS NATURALLY WANT to make as much profit as they can with minimum effort in the shortest possible time. However, as we have seen, this is an unrealistic aim. Successful investing takes time and effort to develop a system that works for you and should keep working for you.

But there are some techniques which, though not exactly short cuts, will help you develop your investing method more quickly and ensure it is focused. We shall consider some of these trading tricks in this chapter.

A good understanding of how the City works in relation to companies and how businesses interact with their advisers is also useful for investors, so we shall examine these relationships as well.

Finally, one of the most valuable weapons an investor can have in his or her arsenal is information. We shall look at sources of information on companies and shares ranging from newspapers to the Internet and how to read between the lines of company statements to find out what is really being said.

TRADING TRICKS

Sorting the wheat from the chaff

Choosing which shares to buy is no easy matter and as we saw in an earlier chapter there are numerous investment techniques you can use to value one share against another. While you should always be searching for undervalued shares or growth opportunities, one of the hardest things is deciding to where actually to start your search. One obvious starting point for your research is to play to your strengths and stick with what you know.

Retail shares are popular with small investors for this very reason. Companies such as supermarkets are easily accessible on your local high street. In a few simple shopping trips you can determine how good they are at what they do, how efficient their service is and how competitive their prices are. This might seem very basic research, but supermarkets are very simple businesses. If you are convinced one has got the business right at the shop floor level it could provide a starting point for examining the company further. You could then undertake more detailed research at the corporate level, examining the company’s profits record, its balance sheet, other businesses, management and strategic plans. It is these factors that are likely to convince you whether or not to buy the company’s shares, but your initial shop floor research will also be an important factor. This kind of shop floor research is suitable for any company whose products or services you come into contact with.

Where do you work? Where do you shop? What washing powder do you use? What is your favourite pub? Where do you bank? Whose bus or train do you catch? What are your hobbies? Where do you live?

Answers to all these questions can produce potential investment opportunities based on your own particular expertise, often an expertise you do not even realise you have. In your daily life you will use the products and services of dozens of companies and you will know whether or not they do a good job and are therefore likely to be successful.

Download

Copyright Disclaimer:
This site does not store any files on its server. We only index and link to content provided by other sites. Please contact the content providers to delete copyright contents if any and email us, we'll remove relevant links or contents immediately.