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How to profit from shares
Finding companies to invest in
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How do you find potential investments?
If you have had some personal experience of a company, if you work for them, or are a customer of theirs, then you are in a perfect position to assess the quality of that business. But always be wary about personal experience. The investment world is littered with companies that may be great to work for, that give excellent customer service and have great products, but if they don't make a profit and they don't generate cash, then they might not be the best investment.
But if you really want to find potential investment opportunities, you need to be proactive. It is no use waiting around hoping that your next investment is going to come along and slap you in the face. The only way to find good investment opportunities do it is to go out and look for ideas. And that means doing your own research.
Read, read, read
The most important way to find suitable investments is to read -- read everything that comes your way. Buy the Financial Times, read the Investors Chronicle and for heavens sake read the Motley Fool! Consider signing up to the Motley Fool's investment service, Champion Shares.
Read as much as you can about companies and investments. Every time you read about a company, mentally run it past your 'stock screen' in your brain. Ask the question "does this company qualify as a potential investment against the criteria I have set in my investment strategy?". If it does, note it down for further research. If it does not, then forget about it immediately.
Some of the best sources for investment ideas are also on the Internet. We list a few here, but there are many, many more.
The Financial Times is pretty much essential reading for anyone serious about taking control of his or her own investments. When you first buy the FT you may feel a bit intimidated, but don't worry, it really is not as dry as it may look. The FT covers company news in more detail than any other newspaper and the Lex column is excellent.
For those starting out, the weekend edition of the FT is a much lighter read. It contains a good personal finance section and an informative stock market review of the week. The Weekend FT also highlights directors' dealings, where heavy "insider" buying or selling could prove to be an investment indicator.
A subscription to the online edition of the FT is well worth considering. It means you can read the Lex column on the day it's written, not the morning after. Even better, you can read articles from the FT archive and other publications too.
The Investors Chronicle publishes all company results from the previous week in more detail than the FT. In particular, they produce very useful financial summaries that can be quickly scanned to see if the company fits with your basic financial criteria. But don't forget -- ignore their 'advice!' You can access the Investors Chronicle online but you need to be a subscriber to use the whole of the site.
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