Investing to hold stocks, and working out what is best. We look at the different approaches, for how you need to work your systems. A good mix indeed
‘Our very survival depends on our ability to stay awake, to adjust to new ideas, to remain vigilant and to face the challenge of change.’
Martin Luther King Jr.
You won’t build a winning portfolio with just any old mix of stocks. Only the best businesses out there deserve your hard-earned money.
So before even being considered for any of the Guild’s portfolios, every potential investment must meet our strict list of eight criteria. No exceptions.
Here’s what they are…
#1. It must be a cash rich business.
A business’s finances are not so different from your own. You probably earn a certain amount of money each month from your job, and maybe some from investments.
Companies with high cash flow ratios also tend to pay dividends. US discount retailer Wal-Mart, for example, has raised its dividend payments every year for 41 years.
Now imagine you had a few companies like that tucked away, working for you in the background for your retirement. This is the power of a cash rich business. And is the kind of business we look for at the Guild.
#2. A great business will survive and prosper through any threats and challenges.
These can come in many different forms new competitors in the market, technologies making operations or products obsolete, shifts in the economy, or changes to legislation…to name a few.
History is full of companies who were at the top of their game but failed to adapt to changing environments. You do not want those in your portfolio.
Take Blackberry, also known as RIM, for example. Not all that long ago, throughout the corporate world, any smartphone was known as a ‘Blackberry’. But in time the compelling features of personal iPhones and Android devices were recognised by employees.