Investing Made Simple by Will The Geek

Proven Solutions

Investment methods used by some of the most successful investors in the history of the stock market, Made Easy.

7 Second Stock Analysis (Or Maybe 6)

Everyone says "Oh, it's complicated. It takes years of study and a university education before you can begin to understand."

Or: "Stock selection takes hours of research and study every day in order to find high quality investments. You have to know what you are doing. You should just leave it to the professionals."

Poo

Investment success depends on one simple task: Picking quality companies.

You want companies that are very well managed and are consistently profitable. The big problem with that statement is that nobody will tell you how to find these companies. It is easy to tell you what to do. It is much more difficult to tell you how to do it. So I am going to show you how to do it.

First, I will assume that you have picked out a favorite investment strategy from the Will The Geek website. A single click on a strategy will return a list of companies that the computer analysis indicates are the best possibilities. Now all you have to do is sort through them and figure out which best fits your investing style and offers the most potential.

To make the analysis as simple as possible, I have boiled down all the financial smoke and mirrors to four simple rules. A quick look at the charts I provide will tell you in just a second or two if this is a good investment or possibly a great investment – or maybe a flea-bitten dog.

So here we go:

First, you want to see sales (revenues) going up. The longer and more consistently that revenues increase, the better. Bouncing up and down is not as good as going straight up, but it is better than nothing.



Second, you want to see profit going up. Again, the longer the better. More profit means more money for you, the investor – especially when the company pays dividends.



Third, you want to see cash going up. Retaining and building cash is the single greatest indicator of a well-managed company. When you see cash going down, it means that the company is burning through its reserves without replacing them with new money (Bad idea).



Fourth, you want to see debt going down. Or better yet, no debt at all. If you see debt going up and cash going down at the same time, dump and run. Unless they turn it around, there is no hope for the company and investing in it is very high risk, or more likely, deadly.



That’s about it. Yes, there are others but they are less important and I will get to those in another article. For now, these will do. If you find a company that fits these four simple rules, you probably have a winner.

Conclusion

The stock market moves up and down constantly, sometimes violently. When it does, it shakes out the weaker investors and the weaker companies. The trick is to be able to ride out the turbulence and come out on top.

The companies that go down last and come up first are those with solid balance sheets. If you have a portfolio full of well managed companies, you will have the confidence and ability to ride it out and even invest when everyone else is in a panic. That's how the big money is made.

Follow the four simple rules outlined here and you will be able to count yourself among the winners.

 

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