Lots of people are thinking that the next company that will be a monster like Microsoft, Apple, Netflix, or Google, will emerge from the recent free-for-all taking place in the CANNABIS SECTOR.
And, those people are likely correct. But, it is not as simple as tossing a few dollars into the wind and hoping they land on the right companies. There is some useful scenario thinking that smart investors follow. Notice, I am using the word SCENARIO?
There are many systems, many techniques, for selecting stocks in companies, [also called shares or equities]. Some use complex algorithms. Some gut feel. Some random selection. Some use complex charting techniques. Some use the financial statements. Is there anything that works well most of the time?
If by that you mean, is there anything that will guarantee a successful pick all the time? Nope! Nothing will work all the time. But you may find scenario thinking to be quite helpful.
Let me start you on scenario thinking and then leave it to you to go visit your Financial Planner or Financial Analyst, a professional, to help you manage your finances the rest of the way. With scenario thinking you map out the probabilities and then make your selection around which to build your game plan based on that which will leave you with the least amount of regret and best fits your degree of risk tolerance.
Among the factors to consider is your ability to risk cash, your knowledge of investing, your familiarity with the stock market dynamics, etc. In there somewhere, you may want to apply the following CRITERIA among your other criteria:
- Experience levels and past successes of the critical executive/management team.
- Focus on cost control.
- Acceptably-high or preferably highest Gross Margins.
- Is it a member of the few, but largest companies in that market space?
- Fewest number of foreseeable potential barriers in the future.
- Broadest market exposure.
- Best marketing talent/programs.
NOTE: this Nugget is for information purposes only and does not constitute a recommendation. Before making any investments or changes to your investment strategies and programs, be certain to consult with a professional investor such as a Financial Planner or Financial Analyst or other qualified investor.