Picking a stock to invest in and profit from is not easy. If it was, everyone would be making tons of money from the stock market. People and companies spend years (and millions) developing and fine tuning an approach to selecting stocks using complex mathematics and powerful computers.
Does that mean that ordinary investors like us are out luck? In my opinion, the answer is NO.
I believe that by studying the foundations of finance and investing, you can still pick stocks that earn you a healthy return. In fact, I would highly encourage you to read some of the classic books in this field like The Intelligent Investor and Beating the Street. These books are a great way to get one (big) step ahead of other causal investors.
In the remainder of this post I will share with the 8 key ratios or metrics that I look at when evaluating whether to invest in a stock.
You’ve read loads of books, listened to some podcasts and maybe even completed a course or two, all to learn how to get on the path to financial independence. There’s one piece of advice that everyone you’ve followed agrees on: stocks are a critical part of your personal investment portfolio.
So, you’re excited and ready to go out and buy some shares in Google, IBM and Coca-Cola. Every expert tells you these are great companies to own that will make you great returns too. But your enthusiasm starts to turn into frustration as you find out that you can’t even apply for a stock brokerage account without a US social security number.
Don’t give up yet because you are almost there. In the next few sections I will share how you can easily invest in great companies listed on US stock markets and what you need to be aware of when you do so.