Finding the Perfect Company

The perfect company - it's the holy grail of the investment world. The company that will make its initial investment hundreds of times over. It's what everyone shoots for. To have bought Microsoft when it first went public... It's how fortunes are made. What does make "the perfect company"?

The search for the perfect company is not the pursuit of day-traders or market insiders. They're looking for quick and dirty returns. High speed, high risk, high stress. No, the perfect company is more along the lines of what an individual investor - like you or I - would look for. I don't want to have to have my hand on my mouse until the closing bell just to make sure I don't lose my shirt. I want to buy a position in a company and know that regardless of what happens today or tomorrow, eight months from now, my portfolio will be worth more than today. I'm not talking about a laissez-faire approach to investing - far from it. What I'm talking about does take a time investment as well, in research, understanding the ins and outs of a company, but one that will be paid off in spades.

That's an approach that I've taken seriously (guess what, we're talking about money here), and that I feel makes the market less of a gamble. It's also a mantra that has gotten me yields in the double digits over the Dow to date in a markedly tough year.

So, you may be asking, "What is the perfect company? What traits should it have?"

One of the most important things - in my opinion - about investing in a company is the feeling that you're a partner. It's essential to know the company inside and out. Be aware of all their products, as well as all of their numbers. Above all, you should be excited in the company you're investing in. If not, what's the point? Your gut is an important part of investing. If you're portfolio doesn't get you going, you might as well be gambling in Vegas. At least you'd get comped.

In the perfect company, fundamentals are, well, fundamental. It's so important to familiarize yourself with the annual and quarterly reports (the 10-K is your friend) and listen to quarterly conference calls (both can be done online, very easily. Check out the company's investor relations site to learn more). Remember, you're not banking on market psychology, you're focusing on profits. No matter what happens to a company, if they've got juicy profits, their share price WILL go up. There's no two ways about it. Make sure that the company is making money and you will be too.

Emotion has a natural part in this. If you're loving a company, it can be expected that you'll be blinded by that fact when it comes time to sell. One remedy for this is defining a reasonable sell point before you even buy. All too often people watch their positions go up past their expectations only to see them fall back down below what they bought for. Have a look at analyst estimates as well as other factors (after following the market for a little while, it becomes sort of instinctual) to try and determine a price to sell at no matter what. Just as importantly, don't forget to reevaluate frequently. Things change, you don't want to miss out on huge gains or look toward a share price the stock will never get to. News and economic factors will influence things, change you're estimates appropriately.

Just as you should reevaluate your sell point for a stock, you should often reevaluate your position in the company itself. While a company may have been exciting and ideal for you when you purchased their stock, things change. Maybe the product line you though would take off didn't. Maybe their visionary CEO retired. Maybe something just doesn't feel right. Ambivalence has no place in this game.

Don't be afraid to speak your mind on the company's business, either. You're an owner, however small, and have an obligation to protect your investment. While you might not have the same clout or voting ability as an institutional investor, or anyone who measures their equity in percentages of the company, but sometimes, making your points known makes all the difference. Lobby to those powerful holders of the company as well as other individual investors. (We'll have more on making your piece heard in an upcoming issue).

If you want to try your hand at speculative, technical trading, this isn't the method for you. If, however, you want to shoot for a combination of excitement and profit, you may want to look into this a bit. It's worked for me. If you're a seasoned investor, or a newbie willing to learn (through methods that don't require money initially) you may find this to be a particularly rewarding idea.

Jonas Elmerraji is the founder and editor of growFolio, the world's first free online investment and business magazine. Issues are available online at http://www.growfolio.com

---

How To Find An Investment Advisor

Do you think you need an Investment Advisor? Hold on... Read More

Waiting 20 Years Can Cost You Millions - Dont Wait Start Today

Many Young people live for Today. They really don't fully... Read More

An Introduction to Offshore Investing

Once upon a time, offshore investment strategies were spoken of... Read More

A Secret Revealed: Why Most (Day) Traders Fail

The following perspective on (day) trading comes from my many... Read More

The Cost of Green Eggs and Ham

Young readers know that March 4th is the birthday of... Read More

Investing: Do You Want To Make Money, Or Would You Rather Fool Around?

It always amazes me how much stock market investors resemble... Read More

Going Offshore For Asset Protection

There are a number of key reasons why individuals and... Read More

What is an Investor Ready Business Plan

A Business Plan, as all good entrepreneurs starting out in... Read More

The Biggest Oil Opportunity in the World ? And How You Can Profit From It

Where is the second biggest deposit of oil reserves in... Read More

Your Worst Enemy To Successful Investing - The Media

How do you make your investment decisions and where do... Read More

Just what is Arbitrage Investment?

In the simplest of terms, Arbitrage means to exploit price... Read More

Making It Second Nature

Not long ago I was laying on my son's floor... Read More

Success Trading: More Basic Terminology for New Traders

One important aspect of trading the markets is to understand... Read More

Seecrets on Investment: Tired of Making Huge Losses in the Stock Market ? Part 1

Over 80% of all individual investors lose money in any... Read More

Asset Allocation Lessons: The 70% Inflation Solution

For investors only... and for speculators who need to invest... Read More

Investment Rowing

You have rowed a boat at some time haven't you?... Read More

Property Investment Just Got Exciting

There is an area in Brazil that has lower crime... Read More

Trading Tips No 4: Technical Analysis The Holy Grail Syndrome

Everyone knows that the Holy Grail of investing and trading... Read More

When Its Too Late to Save for Retirement

You are 55 years old (or somewhere around there) and... Read More

Discipline in Trading and Investing

The one thing I can think of that most affects... Read More

The Key Ingredient To Increase Preconstruction Profits By Over $20,000

One of the greatest preconstruction investing issues that I hear... Read More

5 Day Trading Tips for Success

1. How to Treat Gap Openings A gap up or... Read More

Investing and the Fear of Regret and Greed

People tend to feel sorrow and grief after having made... Read More

Everybody Wants to Know How to Invest

Those unfamiliar with the process of making and managing investments... Read More

How Eating Bitumen Made Me a Better Stock Trader

Stock market trading is a fascinating activity.There are so many... Read More

Can Using Sales Leaseback Method of Investment Property Acquisition Reduce Risk?

Sales Leaseback compared to traditional property investmentCan a Sales Leaseback... Read More

Wit and Wisdom on Money, Wall Street and Success - Part #2

Here are ten more WISDOM packed GEMS that ooffer very... Read More

Angels, Are They Real?

They're real, but few survive. High risk investing is dangerous... Read More

Oil and Gasoline Price Uncertainties

The Light Crude Continuous Contract hit an all-time high at... Read More

Love The Thrill of Risk? Invest in an Annuity!

With the stock market in steep decline, people are looking... Read More

Wit and Wisdom on Money, Wall Street and Success - Part #4

Can you concisely summarize your investment philosophy in a few... Read More

Building The Foundation For Wealth

You wouldn't build your home on anything less than a... Read More

Day Traders and Swing Traders and Options? Maybe!

Typical day traders and swing traders look for stocks with... Read More