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I was recently chatting to a friend about
a stock he had been researching. He
has done a large amount of work on the
stock; forecasts, emailing the company’s management, checking out the competition and
doing a detailed valuation. Then, after about two
weeks of digging, he decided not to invest into
the company as the investment case was not
compelling enough. Yes, the stock looked good
and the valuations decent. But at the end of the
day it did not add up to enough of a great stock.
Otherwise we may
as well just buy every stock that catches our
attention.
Personally, I have a bunch of metrics that help me quickly discard any stock that may catch my eye. The first is the sectors a stock operates in. For trading I am sector agnostic, for my long-term investments I want them to be in the broad consumer growth story.
