Two Very Different Companies with Very Similar Valuations–Which One Should You Own?

Investing is like an essay exam rather than a multiple-choice quiz. Essay answers are more nuanced than multiple-choice — more like an informed judgment call than the unassailably right answer. As a professor, I give my students essay questions because they create a complete picture of what young scholars know and don’t know.

Similarly, investing, like real life, rarely presents us with questions that are as straightforward as those on a multiple-choice test. That is why I am interested in investing in the stocks of well-managed, industry-leading companies; I don’t have to know “the answer.” I simply need the confidence that management is moving the company in the right direction no matter the short-term trends of the market. These companies won’t always generate positive returns, but the dominant ones in each industry have a much better chance of succeeding than the second- and third-tier companies. I also know I increase my odds of success if I select the most attractively priced stocks with the greatest potential for total shareholder return.

Let’s examine two leaders in two very different industries with similar price-to-earnings (p/e) valuations.  Click here to read my column in its entirety: The Arizona Republic

Dollar-Cost Averaging is a Prudent Investment Strategy

If you are a toe dipper or an inch-er when it comes to getting into cold water then you understand dollar-cost averaging.  A prudent strategy in rising and falling markets. Below is my latest column.

Perhaps by now you’ve compiled your stock “watch” list. Presumably it contains the names of companies whose products or services you admire.

In his book “One Up on Wall Street,” fabled growth investor Peter Lynch advises that the average investor can produce enviable returns just by looking for companies with products they know and use every day. Lynch goes on to say, “Everyone has the brainpower to follow the stock market. If you made it through fifth-grade math, you can do it.”

Let’s take heart in his words as we press on.

Most likely you are wondering if you should be investing now, with every headline screaming that the market has hit historical highs. Many individual investors fear that just as they are jumping in, the “smart money” is jumping out.

Read more here:  The Arizona Republic

Remember: The Stock Market is a Tug of War Between Fear and Greed

If there is one thing you need to remember about investing, it is this: The stock market is a tug of war between fear and greed.

Whenever possible, we want to buy from fearful sellers and sell to greedy buyers. My experience confirms that the best time to buy a stock is often when investors are running for the exits. It is also the hardest time to do so. That is why I keep a watch list of stocks I want to own (yes, I really do keep a list and so should you) and do my best to learn a great deal about the company before I make a purchase.

Read the rest of my column here: The Arizona Republic

Avoid What I Call Terminally Cheap Stocks

Click here to read my current column in The Arizona Republic.  This week we are exploring the “Buggy Whip” factor.  As technology and fashion trends change, savvy management teams will avoid going the way of the buggy whip–into extinction–when automobiles replaced horse drawn carriages at the dawn of the last century.

We take a close look at Coach.  The company is facing tough competition from Kors and Kate Spade and provides us with an excellent, real-time example.

Feel free to post a comment, ask a question or invite others to follow along.

Until next week,

Nancy

 

 

Look for the Industry Leaders When Buying Stocks

Last week our assignment was to create a list of companies we might be willing to invest in.  This week my column discusses a key criteria to analyze in those companies when determining where to invest.  See my regular Wednesday column in The Arizona Republic. 

Debut of my new column in The Arizona Republic

My new column in The Arizona Republic debuted today.  The column is an investing column for women and is entitled:  “Your Investing IQ.”  The research shows that 90% of women will–at some point in their life–be responsible for the family finances.  Yet most women also say they are not confident in their financial decision-making.  We are going to work on improving our financial knowledge.  Together.

So check out my new column.  And feel free to comment or write with questions:  nancy.tengler@cox.net.

http://www.azcentral.com/story/money/business/2014/04/01/investing-takes-discipline-patience/7182259/