Chapter 10Choosing Your Investments

Know what you own, and know why you own it.

– Peter Lynch

How many millionaires do you know who have become wealthy by investing in savings accounts? I rest my case.

– Robert G. Allen

The individual investor should act consistently as an investor and not as a speculator.

– Benjamin Graham

In Chapter 9, we discussed the different types of securities to choose from once you've formulated your thematic view of the world as we did in Chapter 8. Now it's time to pick a specific security and a price at which you are comfortable buying it. Much of the work has been done, but what lies ahead can make all the difference between picking a loser or a winner. A winner is pretty self-explanatory—it's a security that experiences an upward move in price. Yippee! Everyone loves a winner in the stock market. A loser—well, that's the one you end up wishing you'd never heard of. While you might feel like you are alone if you have picked one you wish you hadn't, we can tell you both first hand and from conversations with our colleagues, it happens. What's key is learning from it so you can minimize the odds of it happening again. We are going to start with stocks, so let's take the next steps to find those winners and avoid everything else.

12 Questions You Need to Answer When Looking to Buy a Stock

For any investor, whether new or experienced, it can be tempting to buy the latest hot stock without doing much homework, relying on all the wonderful things you've ...

Get Cocktail Investing now with O’Reilly online learning.

O’Reilly members experience live online training, plus books, videos, and digital content from 200+ publishers.