How I find my investment ideas

How I find my investment ideas

For starters – remember, I’ve been doing this a long time. Most of my money is set in stable dividend paying investments that provide me with a regular income stream. Thus, Making My Money Work for Me!

However, the die-hard investor in me cant resist looking for that next Google! So I’m always looking for new investment opportunities that can grow. I’ve allocated a certain percentage of my portfolio just for new investment opportunities.

Here are some of the places I look for new investment opportunities and I suggest you should too.

Observe Your Everyday Surroundings. 

Why not take a trip to your local shopping mall and scout out the stores to see what is popular? Pay attention to where your kids want you to take them for back-to-school shopping. As you go about your daily life, take note of the products you see people using. Peter Lynch, the former portfolio manager of Fidelity Investments’ Magellan Fund and one of the most successful money managers in history, got some of his best investing ideas from listening to his wife and kids after they came back from running errands. In fact, Lynch bought stock in Hanes after his wife brought home a new product the company introduced—L’eggs® pantyhose she discovered while in the checkout line at the grocery store. The investment made millions for Fidelity. 

Grab a pad of paper and observe your everyday surroundings. Make a list of the name-brand products you come across—products such as Coca-Cola and Starbucks where new once. I would even suggest making a list of brands that are popular and selling well in stores because these may be produced by private companies that might be public companies later. In recent times, such was the case with Starbucks, which was a privately held company that became a public company. 

Consider each item a potential investing idea. Inspect the packaging to find the name and address of the manufacturer. Search the Internet or call the number provided and ask if the company is publicly traded (meaning you can purchase shares of stock in it). If it is, tell them you would like to request an investor’s package that will include the annual report and other relevant information about the company. In most cases, they will transfer you to the investor relations department. Give them your name and address, and they will mail you a copy of the package free of charge. 

Ask Your Friends and Family. Talk to people!

Peter Lynch claims he got several of his best investment ideas from his wife and children. In addition to the aforementioned lucrative investment in Hanes, Lynch also investigated a particular store after his daughter furnished her entire back-to- school wardrobe with its clothes.

An example from my personal experience comes from when I was growing up in Detroit. There was an amusement park called Cedar Point, located on Lake Erie between Cleveland and Toledo in Sandusky, Ohio. It was only a few hours’ drive from Detroit, and every summer we kids would always look forward to going because it consistently built taller and faster roller coasters. Sure, it had many other rides—but it was the roller coasters that kept us coming back. Cedar Point is world famous for its roller coasters. Its parent company is Cedar Fair, L.P. 

I’m going to write up a detailed analysis of Cedar Fair in a separate article. Its a core portfolio holding of mine and has been for years. I will tell you why I bought it and why I still think it makes sense for those who are looking for growth and current income for their portfolio.

Look at What Sell-Side Analysts Are Recommending. 

Most larger brokerage firms and investment banks have sell-side financial analysts who cover particular stocks and industries. Brokerage research departments publish monthly reports on many stocks, bonds, and other financial products. If you have an account with a firm, your broker can often provide you with copies of these research reports. Analysts are among the brightest people on Wall Street but they have difficult jobs. Their work, for the most part, is good. However, they too often are restricted to following only those larger companies that their own brokerage firms underwrote initially and are continuing to advise. The Internet is also a great place to find what sell-side analysts are recommending. I don’t recommend buying a stock just because they recommend it, but again it’s a good place to get ideas. If you have an account with Charles Schwab or Bank of America for example, you can get good research on potential companies from them.

Read Newspapers, Magazines and online news and information sources. 

Most investors use the newspaper to check on stock, bond, and mutual fund prices and other information. I suggest the Wall Street Journal, The New York Times, The San Francisco Chronicle, Investors Business Daily for starters.

Most papers in large and mid-size cities have a financial page that reports prices on most financial products. The Wall Street Journal, New York Times, and Investor’s Business Daily provide more detailed information on weekdays. Barron’s (comes out Saturdays) gives an extensive end-of-the-week review of financial markets. Barron’s is highly recommended for those who like to do weekend investment research. 

Some major financial and business magazines investors can choose from are Forbes, Financial World, Fortune, Bloomberg, and BusinessWeek for example. Bloomberg, Forbes, and Financial World concentrate more on finance and investments. The other publications are geared for business information with fewer investing articles. Other publications for the mass market of investors include Money and Kiplinger’s.  Honestly, there are so many sources that I can name them all. Some are free and some you have to pay for. There is a lot of free financial information out there you just have to look for it. 

Remember the Internet is a gold mine of information. There are so many people wrting blogs like me and putting up financial information. I’m sure you will find one that you like and feel gives you good information.

Pay attention to the media

Television used to pay little attention to business, but this inclination changed in the 1980s. Now, investors can get Financial News Network (FNN) and CNBC, with price updates, interviews, and other financial topics. Avoid the commercials offering speculative “get rich schemes” in penny stocks, commodities, metals, art, and other high-risk stuff (unless you truly understand it). 

The Wall Street Journal offers an excellent program syndicated on cable TV; so does CBS Marketwatch, CNBC (I admit I like and watch Jim Cramer and Mad Money) and Bloomberg. 

At the end of each weekday, the Nightly Business Report (NBR) carries an excellent synopsis of business news, the market, and global economics. Reuters news agency, which offers some of the finest financial information in the world, assists NBR in getting information for each show. I also like Bloomberg Television; Bloomberg is among the finest financial information sources in the world and if you are fortunate enough to have access to a Bloomberg terminal—they are costly but loaded with information for fundamental research and news—you can actually watch via your computer if you don’t have the show in your area. 

And dont forget Twitter and Discord! 

Start an investment club. 

Why not get a group of people together and talk about your investments and share ideas? Its been a long time since I was in anything like that but it was fun and we all shared new and interesting ideas. 

If you don’t know of one, start one! 

Travel!

I saved the best for last, because this is what I just love to do. When I travel I always let people know I like to invest and I always hear about companies I probably never would have, especially when I travel abroad.

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