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How to find a crisis-resistant company to invest in?

Posted on : 01-11-2008 | By : admin | In : Uncategorized

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In times of financial crisis a good investor will not only buy stocks at the right price, but will also invest his money in companies which will continue to prosper (that is make money for you) well into the future. It is true that no one can really see the future, but here are certain characteristics which you are advised to take into consideration when thinking about a stock investment. Below you can find some pointers to get you doing more research:

  • Companies which dominate their market in certain way. Such dominance, also called ‘economic moat’, may be (for instance) a recognized brand, a wide network or high costs involved in switching to a different service provider. Because of these moats make competitors find it hard to get a foothold and, therefore, it more probable that the company will stay financially successful and stable.
  • High return on equity. This is a good measure of how successfully a company makes use of invested money to render growth in earnings. A high ROE may indicate that a company has a moat.
  • Consistent and rising dividend payments may indicate that a company is consistently making profit.
  • Companies operating outside the US. Warren Buffet and other financial experts are convinced that the increasing US trade deficit will devalue the US dollar in the long term and, therefore it is prudent to have some exposure to companies which operate in markets different than US.

Obviously, such measures are just the tip of the iceberg. If you are seriously considering investing in stock, you have to do some more research on your own.

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