How to Buy Stock

Topics: Economics, Magellan Fund, Fidelity Investments Pages: 3 (666 words) Published: April 10, 2013
Strategies for Stock Selection

Hi everyone, today my topic is about teaching everyone how to buy stock. I am going to introduce some strategies for stock selection step by step.

Buy what you know

Go with what you know. That is the advice of Peter Lynch, former portfolio manager of Fidelity Magellan Fund. According to Peter, during a lifetime of buying cars or cameras, you would develop a sense of product recognition like what’s good, what’s bad, what sells, and what doesn’t. The same applies to stock choosing. Fist of all, I suggest stock buyers carefully thinking about the following typical questions I addressed before investing money into risky stock market.

* What product do you really like?
* What is popular among your friends?
* Who make it?
* Do you think it will continue to be popular?

You are expected to take these factors into consideration. If you can’t explain what the company does, then you shouldn’t buy it. In addition to knowing what the company does and what whether it makes good products, you also need to know how the company is going as well as the financial position of the company.

Current and Future

* Markets Available

When selecting a stock, you must consider the markets available for the product and service. Does almost everyone already own this stock? In the early phase of development, a company first puts a product or service on the market and its sales are expected to grow rapidly because not everyone has what it sells. In the late phase, a company’s product or service has been on the market for a while, and its sales are no longer expected to grow rapidly. The stock of a rapidly growing company is more likely to increase in price.

* Global Markets

Global markets are important as well. It is an effective tactic used to extend examine the prospects for U.S. companies in foreign markets. McDonald’s is a good example of a company that had saturated the U.S. market, as a result, its sales...
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