Investing 101

Investing in any stock is similar because it is the same asset class and the desired results are relatively the same amongst the various market caps.

Assuming the reader does not have much experience or just wants a refresher.

One of the easy things that beginner investors should do is choose a company that they know about. In many cases this is a company such as Costco, Nike, Apple. Look around your housen or even your surroundings when you go out to your local shopping mall, I can guarantee many of the brands that you see are publicly traded. Whether or not you realize it, the stores yoiu go to and the brands you weear give you a leg up on the average investor.

Just as I mention on a couple other places, there is a difference between main street and wall street. Peter Lynch in his books highlights that the individual investor has a leg up on the institutional investor in the sense of main street. A great example is Lululemon. Lululemon started off as a a yoga clothing brand, if you were walking around in los angeles 10 years ago you would have identified the logo or the stores themesleves that were very popular amongst teens and young adults. Lets look at the other side of this, an investor reads Investors Business Daily and sees that there is a positive news article on a clothing brand Lululemon. He checks out the financials and sees that it is a growing company and decides he is going to invest in it. Although we can reach no such conclusion, one would say assume that a 15- year old girl would have bought Lululemon clothing before the investor had even known about the stock. He knows about the company from a second hand source, scuh as a newspaper. The investor liekly has the advantage over the 15-year old girl of being able to read up on the financials, read the 10-k and what not. Ironically the 15-year old girl knows more about the brand than the investor. Not only is she a stakeholder in the company, but she can also analyze the trends when she goes to school, goes to the gym, or even goes to the store to buy more clothing. If there was something that was wrong with the clothing, a competitor is gaining ground or a store was being shut down, because it was not doing well, she would be the first one to know. Not the investor who looks at the quarterly filings and reads reports from the CEO and Board.

As an individual investor it is to your advatnage to invest in caompnies that you are familiar with. Verifying the financials and business models is completely independent from knowing about the companies culture, targeted audience, where the locations typically are, all of the unwritten or commonly known things aroudn the company that stakeholders would know. A great example is Walmart, if you lived in Benton Arkaans in the 1970's you would have know about Walmart. One of the greatets companeis in all of America. One would be naive to think that a Hedge Fund Manager on Wall Street would have come across Walmart on his own. I would think even the majority of people in Arkansas would know about Walmart rather than the Hedge Fund itself. Investing in Walmart. IF one had invested Walmrt in 1980, they would be up give or take 2,000x.