A few considerations when building your stock portfolio
“I am not a registered investment advisor or securities broker dealer. These are my thoughts and are not advice. Seek your own education or you will lose money.”
Scroll II: The Greatest Salesman in the World
- I will greet this day with love in my heart
Value
- Old-timer, long history
- Strong moat
- Consistent dividend
Some tools I use
- 10 and 5yr chart (monthly and quarterly)
- Consistent EPS
- Free cash Flow
- Net Operating margin
- Long term debt-to-capital
- **Graham number: Square root of (22.5 x EPS x Book value)
- Book value refers to the total amount a company would be worth if it liquidated its assets and paid back all its liabilities. Book value can also represent the value of a particular asset on the company's balance sheet after taking accumulated depreciation into account.
- Examples
- KO, JNJ, INTC, MSFT, MO, XRX
Growth
- Cultural (ex. uber)
- Room for growth
- Ability to scale (ex. Raise prices, ad revenue, user base)
- Market share
- Competition
- Spending
- **LEADERSHIP
How do you know where to go?
- Financial management
- Personal free cash flow
- Free time to get educated
More time to learn + free cash = growth
Less time to learn + free cash = value
More time to learn + less cash = options & growth
Less time to learn + less cash = fractional companies you use a lot
WHAT’S THE KEY: Learn → test → “perfect” → Scale up = $$$
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