The Barrett Edge

Hunting For Investment Ideas: Information Overload

For many investors the process of finding investment ideas can be confusing and overwhelming, especially in the stock market.  Everyone wants to pick winners and stocks of successful companies, or companies that will become successful.  But there are just so many choices and a lot of information out there.  Many investors don’t know where to start looking or how to sort through the vast amount of companies listed on the exchanges.  There are also many types of investments other than stocks. Ideas can be drawn from your knowledge and experience.

It’s important when investing to have an edge and an edge is formed through formal education, previous/current jobs, informal education and your family experience. Think of everyday things you are  familiar with . Think of things you use, do, need/want, places you go etc.  Or simply think about subjects that you are interested in knowing more about. By just living an ordinary life and understanding how products and services benefit you and make your life more convenient you have an edge over analysst who are studying Discount Cash Flow Analysis and other quantities measures.

In reality, behind a stock is a company that has a product and if you understand how valuable the product is then you will understand how this product is poised for growth and ultimately a profitable investing strategy. Also, by reading business and industry trade magazines you will be hooked in to one of the best sources for finding ideas. Sometimes a certain topic or event is discussed and some companies are mentioned (involved, affected, interviewed, stated as an example, etc.) Start there and then expand outwards.   Your list may be quite large at the end of this step. But don’t disqualify any ideas yet, as you’re just brainstorming and at the first phase of narrowing the information overload.

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