A simple procedure is described here
It is important to establish a minimum procedure the moment we decide to invest directly in companies.
A simple method that consists in:
–Choose companies that fulfil certain characteristics
–Quantify and evaluate that the companies you’ve chosen satisfy a minimum number of features
-Establish an investment plan and be disciplined
We will extend these concepts below. Let’s start with our list of characteristics:
CHARACTERISTICS:
- Clearly defined and consistent mission.
- Important competitive advantages.
- High growth in revenues, cash flow or dividends.
- Highly incentivized and competent management.
- Great market opportunity with high growth.
- Financially solid.
QUANTIFICATION:
Probably, it is difficult to find many companies that suit all of these characteristics.
In our case, if companies don’t fulfil at least 3 of the features mentioned above we won’t even consider investing. The ideal situation would be to look for at least 5 characteristics.
How to invest, inbestMe’s SCOPE:
To have a disciplined investment turns out to be essential.
Once the companies have been picked we just have to invest regularly in accordance with our plan, check every quarterly the reasons why we are investing to make sure they don’t deteriorate and sit down to watch.
To guarantee we invest in the market’s different moments, it can be as easy as adding one position per month or quarter depending on your portfolio’s dimensions. We can always strengthen our positions if we observe that our thesis is reaffirmed in a company already in our portfolio.
If we are successful and end up selecting 40 “good” companies in our whole life, then we can apply what Charlie Munger said:
“If you buy a few good companies, you can then enjoy life and this is a good thing.” (This in other words can be defined as “sitting on your ass”).
If you don’t have much experience in the world of investments it might be better to start with an easier strategy.
A good recommendation is to build an efficient portfolio based on low cost ETFs that are indexed to different markets so that you get a high diversification, buying a wide selection of the world’s market. This is now possible with our diversified portfolios and only from 10,000 €. Start investing better, invest with us.
