Investing is a superpower.
But schools won't teach you how to do it.
Here’s a 5-step framework for picking your first stock:
But schools won't teach you how to do it.
Here’s a 5-step framework for picking your first stock:
1. Set goals for your portfolio
There are 3 reasons to invest:
- Income (dividends)
- Preservation (wealth)
- Appreciation (growth)
Investing for income leads you to low-growth companies.
Preservation leads you to blue-chips.
Appreciation leads you to growth stocks.
There are 3 reasons to invest:
- Income (dividends)
- Preservation (wealth)
- Appreciation (growth)
Investing for income leads you to low-growth companies.
Preservation leads you to blue-chips.
Appreciation leads you to growth stocks.
2. Pick a sector
There are 11 sectors to choose from:
- Energy
- Utilities
- Materials
- Financials
- Industrials
- Real Estate
- Health care
- Consumer Staples
- Information Technology
- Consumer Discretionary
- Telecommunication Services
After you choose a sector…
There are 11 sectors to choose from:
- Energy
- Utilities
- Materials
- Financials
- Industrials
- Real Estate
- Health care
- Consumer Staples
- Information Technology
- Consumer Discretionary
- Telecommunication Services
After you choose a sector…
3. Pay attention
What are blogs, articles, and news outlets saying?
This won’t be the reason you invest.
But this can ADD to the justification for why you invest.
Ex: Oil producing countries slash oil production.
Less supply = higher prices.
Higher prices = higher profits.
What are blogs, articles, and news outlets saying?
This won’t be the reason you invest.
But this can ADD to the justification for why you invest.
Ex: Oil producing countries slash oil production.
Less supply = higher prices.
Higher prices = higher profits.
4. Identify the company
So you have an idea of the industry you want to invest in.
But how do you narrow down the 100s of stocks in it?
There are 3 ways to do it:
- Use ETFs
- Use a stock screener
- Read what others are saying
But you shouldn’t invest yet.
Now you need to…
So you have an idea of the industry you want to invest in.
But how do you narrow down the 100s of stocks in it?
There are 3 ways to do it:
- Use ETFs
- Use a stock screener
- Read what others are saying
But you shouldn’t invest yet.
Now you need to…
5. Understand the financials
There are 3 components to a company’s financials.
- Balance sheet
- Income statement
- Cash flow statement
Let me break those down:
There are 3 components to a company’s financials.
- Balance sheet
- Income statement
- Cash flow statement
Let me break those down:
Balance Sheet.
A balance sheet shows you what a company owns and what it owes.
Here’s how to calculate it:
Assets = liabilities + shareholder equity
Here’s where you can learn more:
A balance sheet shows you what a company owns and what it owes.
Here’s how to calculate it:
Assets = liabilities + shareholder equity
Here’s where you can learn more:
Income statement
An income statement shows you a company’s profits or losses.
Here’s how to calculate it:
Net Income = (Total Revenue + Gains) - (Total Expenses + Losses)
Here’s where to learn more about it:
An income statement shows you a company’s profits or losses.
Here’s how to calculate it:
Net Income = (Total Revenue + Gains) - (Total Expenses + Losses)
Here’s where to learn more about it:
Cash flow statement
A cash flow statement shows you how money is spent.
Here’s how to calculate it:
Cash Flow = Operating activities +(-) Investing activities +(-) Financing activities
Here’s where to learn more about it:
A cash flow statement shows you how money is spent.
Here’s how to calculate it:
Cash Flow = Operating activities +(-) Investing activities +(-) Financing activities
Here’s where to learn more about it:
Before you pick your first stock, make sure to:
1. Set goals
2. Pick a sector
3. Pay attention
4. Pick a company
5. Understand the financials
If you enjoyed this thread, please:
1. Follow @WOLF_Financial
2. RT the first tweet
1. Set goals
2. Pick a sector
3. Pay attention
4. Pick a company
5. Understand the financials
If you enjoyed this thread, please:
1. Follow @WOLF_Financial
2. RT the first tweet
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