Investing in High-Quality Stocks

In my journey with money, I often share with my family and friends the importance of investing. Most of the time, I will be asked to share my investment philosophy and methodology. My own research usually focuses on selecting high quality stocks to add into a portfolio and I am a believer of buy-and-hold strategy. In essence, patience is the name of the game!

Many of the people whom I get to share with will go on to ask me what do I mean by “high quality stocks”? High quality can means different things to different people. For me , high quality is a business characteristic. I try to find companies with that have a sustainable competitive advantage: companies that can grow, protect and nurture their markets over long and multiple economic cycles. The companies  typically generate a lot of free cash, have low debt on their balance sheet, can grow during good and bad economic times, and usually trade at discounted valuations to the market. I often tell people that you do not need to have too many stocks in your portfolio to the extent that you have difficulty tracking and monitoring them. As a general rule of thumb, a concentrated portfolio of 15-20 stocks works nicely. As I believe  in depth rather than breadth, I will want to do intense research on each of the 15-20 companies that I selected in the portfolio. I want to understand these businesses, have conviction in them and hold them for long periods of time as long as they perform as I expect.

For starters, one good way to search for high quality stocks is information gathered from conversations—such as at home, in the grocery store, or with fellow colleagues in the office—and other information gleaned from daily living. From there you can do further research into the qualitative and quantitative aspects of the companies providing the products and services that come to mind. Remember to always do your own due diligence and never rely solely on hearsay. Don’t ever buy into something that you do not know.

If you are reading this and you are thinking to yourself that you have no investment knowledge and you find it hard to select high quality stocks on your own, I would really want to recommend you to an investing course that I have personally benefited from. My closed interactions with this community, trainers as well as graduates of the different batches allow me to glean so much valuable insights and nuggets of investing wisdom. When you hang around with like-minded folks, it will rubs off. As a result, I have grown to be a much better investor myself. For those who want to find out more, please leave me a message and I will try to get in touch with you.

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