Why Invest in Stocks?
Before we answer how to invest in stocks,we have to answer an even more basic question, “Why should you even try to beat the market?
You should try to beat the market because achieving even a slight amount of outperformance will morph into breathtaking amount of money.
Basic Principles
The principles to successful stock investing are simple and straightforward. Master these few basic principles and you will master the stock market.
Buy Quality Companies
In the preceding report, we give the three most basic principles to successful stock investing. But if we had to reduce stock investing down to one simple rule it would be this: just buy good companies.
Some might say this approach is too simple. The market prices all this “good” information in already and it is not sufficient just to seek out and favor good companies. Investors have to be one step ahead of the market and factor in how the market perceives these good companies.
The people who believe this nonsense are wrong. They are making stock investing more complicated than it needs to be.
You will be amazed at how you can find outstanding stock investments by simply finding outstanding companies. We will convince you of this by doing exactly what we claim is possible.
Use the Fundamentals
Furthermore, there is no mystery about how to spot good companies. There is a litany of simple, straightforward, and proven, financial statistics that brilliantly and reliably reveal these good companies. These are the “Fundamentals.”
Below are three powerful reports that explain the three main types of fundamental analysis.
Fundamental Cheat Sheet
There are many fundamentals. We cannot do a full report on each of these insightful numbers. But we can provide a handy cheat sheet that lists the most important fundamental statistics and how to calculate them. Read the following report cover-to-cover or just refer back to it as a reference whenever you need it.
Each of these numbers reflects a very important aspect of each company to which it is applied. But you cannot underestimate how incredibly beneficial it is to pull all these numbers together and create a single statistic reflecting the overall fundamental strength of each company.
When you combine these numbers into a single number or index, you cancel out the noise in each number and you amplify the more meaningful information. The power of that final overall number is greater than a mere sum of the individual parts.
Just as you can almost magically achieve a higher return with less risk by combining several investments into one portfolio, so too can you achieve greater insight with less error by combining several fundamental statistics into one fundamental statistic.
Use the Stock Fundamentalist
This process works! Fundamental analysis is fun, simple and rewarding. We can prove it to you and give you a head start in the process.
We crunch all the most insightful fundamental statistics and combine these numbers into one powerful, unambiguous fundamental rating for each stock. And our ratings perform brilliantly.
Fundamentals | Rating | Recommendations | Performance Since Inception 7/2/2021 |
Outstanding | A | Buy | +25.1 |
Average | B | Hold | 8.0 |
Poor | C | Sell | -18.9 |
If you have a list of stock investments that you are thinking of buying, and would like some insight about their true strength that is based on nothing but the cold, hard numbers (i.e. not opinion, speculation, or hearsay), then our work is for you.
You will be amazed at how those cold, hard numbers usually govern where those stocks ultimately go. You will be dazzled at the power of straightforward fundamental analysis.
Glossary of Key Terms
There are many terms and concepts that are particularly useful to understand in stock analysis. Below we list some of the key terms in finance and economics. You can study them all now, or reference them when you need them.
Black Scholes Option Pricing Model
Capital Asset Pricing Model CAPM
Cobb Douglas Production Function
Common Size Financial Statements
Contribution Margin Percentage
Efficient Market Hypothesis EMH
Financial Accounting Standards Board
Generally Accepted Accounting Principles
Law of Diminishing Marginal Return
Marginal Rate of Technical Substitution
Multiple Discriminant Analysis
National Bureau of Economic Research
Percentage of Sales Method of Financial Forecasting
Pro Forma Financial Statements
Product Financing Arrangements
Research and Development Financing Arrangements
Sale of Receivables with Recourse
Term Structure of Interest Rates
Black Scholes Option Pricing Model
Capital Asset Pricing Model CAPM
Cobb Douglas Production Function
Common Size Financial Statements
Contribution Margin Percentage
Efficient Market Hypothesis EMH
Financial Accounting Standards Board
Generally Accepted Accounting Principles
Law of Diminishing Marginal Return
Marginal Rate of Technical Substitution
Multiple Discriminant Analysis
National Bureau of Economic Research
Percentage of Sales Method of Financial Forecasting
Pro Forma Financial Statements
Product Financing Arrangements
Research and Development Financing Arrangements
Sale of Receivables with Recourse
Term Structure of Interest Rates