DISCLAIMER: This is not financial advice. At all. Please do your own research, develop your own investing strategy, and understand that there’s risk (potentially, a lot of risk) involved when you invest. Personally, I don’t invest money that I cannot afford to lose. Or to rephrase, I only invest money I can afford to lose.
One of my pillars of wellness is building wealth. I created an entire investment strategy, which I’ll post about later, and stocks make up one part of that strategy. During the time that I’ve been investing in stocks, I’ve developed a list of criteria I use to help me select stocks to invest in. I buy stocks with the intention of holding. If you have a different strategy, then your criteria may vary. And that’s OK. It’s your money!
This is not an exhaustive list, and it will evolve over time. For now, here’s some of the criteria I use to buy stocks:
I’m a long-time customer
I’m quite particular with how and where I spend my money, and my loyalty is not easily earned. So, if I’ve been a paying customer for several years, then it means that I believe in their company and their product or service. The next step, naturally, is for me to invest my money in that company.
Longevity
How long have they been in business? What’s been their track record? Longevity signals to me that you’ve been in business long enough to know how to solve lots of different problems. The people at a company need to be resilient. If there’s a problem, big or small, you have to solve it. Being in business isn’t about being a mega genius or super lucky. It’s about consistent hard work, perseverance, and problem solving.
Potential
I [kinda] have the gift of foresight. It, at least, seems easy for companies to come in and “disrupt” other companies, so I have to be able to visualize the need for your product/service beyond the next 2 years.
My industry expertise
What do I know about this company and their product or service? What do I know and how much do I know about this industry? If I already have industry expertise, then I know the latest news, trends, problems, etc for that industry. This helps me more easily understand the market, meaning, I have a pretty good grasp of the competition, for example.
Revenue
Not much to say here. Are you making money or nah? I’d rather know the company’s profits (since revenue is just the amount of money the company brings in and does not include the expenses a company has to pay out) and revenue, but the details around the profitability of a company are not always publicly available.
The people behind the company
Who makes up your leadership team? Does everyone look the same, have similar experiences, from the same school, etc? Diverse teams make the best teams period. A company as a whole, not just the company’s leadership, should include employees who look different, think differently, have different educational backgrounds, etc. When you have people asking questions and challenging one another, a company is more likely to create the best product or service for their customers.
Target audience
What’s the target audience of this company? Why? Are Black people included in their target audience? Why or why not? Can the company be bothered to have inclusive images, language, etc featuring different people of different cultural backgrounds? Some companies choose not to employ Black people nor market to Black people. If that’s the case, why should I buy their product or service, let alone invest my money in a company that doesn’t care about my community?
Keep in mind that some companies market their product or service to the Black community, but their product or service doesn’t help us in any way. Just because a company considers the Black community to be a part of their target audience, doesn’t mean that I’m automatically throwing my money at the company.
How do you pick stocks? What factors do you consider when choosing stocks to invest in?
*Photos by @rawpixel from nappy.co
