The World's Simplest Stock Picking Strategy

How to make money investing in the companies in your life

Edward W. Ryan

• Éditeur: Harriman House
• Année: 2021
• ISBN:
  9780857199447
• Édition: 1
• Sujet: Negocios y empresa
• Sous-sujet: Gestión del patrimonio

Every investor needs an edge.Professional investors on Wall Street have the best education, the deepest knowledge of company accounts, the latest technology, and teams of analysts at their disposal to help them identify the best stock investments. That is their edge. As a part-time, individual investor, you cannot compete on their turf.What can you do? This is where The World's Simplest Stock Picking Strategy comes in.As you go about your life, there are companies you interact with regularly as a consumer. Some companies will stand out to you as having remarkable products or services, which you use time and again, and which you imagine yourself using long into the future. You may not have realised it, but you have an excellent knowledge of those companies. This is your edge. This is where you should invest.In The World's Simplest Stock Picking Strategy, Wall Street equity adviser Edward Ryan describes the investment strategy he has used for his own personal investments for the last ten years and shows you, step by step, with full practical guidance, how to put it into practice yourself.You do not need to know how to read company accounts, you do not need an MBA, and you do not need to spend hours each weekend reading the business pages. The strategy is simple and accessible to anyone who is a regular consumer of products and services in their daily life.What's more, The World's Simplest Stock Picking Strategy also has built-in steps to help the investor construct a balanced portfolio, invest during market pullbacks when other investors are fearful, avoid overtrading, and deal with the sticky problem of when to sell an investment. These are all things that professional investors struggle with, but they are taken care of by The World's Simplest Stock Picking Strategy.If you are ready to take a strategic approach to investing in stocks and start out on the road to building long-term wealth, The World's Simplest Stock Picking Strategy is your essential guide.

Step 1: List Your Life Activities

The first thing we do in the World’s Simplest Stock Picking Strategy is take a hard, honest inventory of our interactions with companies.

• What products and services are you using in your life?
• What things do you buy?
• What services do you use?

You may not realize it, but your understanding of the companies you use in your own life is potentially valuable. These companies you use are the ones where your opinion of the product or service matters from an investment perspective.

Begin by creating a list of all the products and services you have been recently using in your life. This fluid list, which we will call your Life List, is the foundation of the World’s Simplest Stock Picking Strategy. This Life List will help you identify and organize the companies that you are interacting with.

We separate the Life List into five categories based on the frequency of use of each product/service:

1. Daily: These are products and services that you buy or use on a daily or near-daily basis.
2. Regularly: These are products or services that you buy or use regularly, but not every day. These are things that you use or do weekly or monthly.
3. Occasionally: These are products or services that are a part of your life, but there are longer or more inconsistent periods between use.
4. Infrequently: These are fringe activities in your life. These are things you have bought or services you have used, but they are not things you would consider to be regular or even occasional occurrences.
5. Want But Don’t Have: These are products or services that you have a strong desire for but haven’t actually bought or used them yet.

Take your time creating your list.

It may take a few weeks of consciously thinking about your daily activities and habits. Track them carefully.

You can pull up credit card statements to jog your memory of recent purchases; but remember, the list should not be limited to things you buy—it should also include free services that you use, such as websites and apps. Just because you are not paying a company doesn’t mean they aren’t making money off you. They could be selling your data or making money from advertising, or they could be intentionally forfeiting profit now to build a following that they can profit from in the future.

Company executives are highly skilled at figuring out how to turn a customer base into profit, so let them figure that out for you. There are plenty of Harvard and UPenn MBAs with the know-how to turn a profit from an engaged customer base.

So, we are not going to focus on how company managements might be able to operationally generate profit. Instead, we are going to focus on what it takes to get that engaged customer base—a truly special product or service. That is what ultimately separates the powerhouse companies from the rest. And no one can judge those products and services better than you.

Once you have created the list of products and services you use, you need to find out the company behind each of them.

If ...