The Four Commandments Of Great Investing

Forget ten, when it comes to looking for invest-able businesses, there are really just three commandments to abide by.

And for your investments in these businesses to succeed, there is a fourth.

Follow these, and the laws of business and investing shall bring forth great wealth and much prosperity.

Abide them not, and thou shall find thyself lost in a confusing sea of talking business head pundits, stock pumpers and dumpers, and self-proclaimed wizards and mages espousing such mystical secrets as MACD and Bollinger Bands.

person using macbook pro on black table

Image Source: Unsplash

Some of these otherwordly methods may appear to work over short time periods, but be assured - nobody in the Forbes Billionaires list got there by pouring over stochastic indicators. No, these true masters of investing got there one way.

And that was by owning great businesses for long periods of time.

So let's come down from the mount with our digital tablets and look at the word of the investing gods, spoken through the success of the true investing masters throughout history.

Thou Shall Own Businesses With Huge Addressable Markets

You don't make a fortune owning a lemonade stand.

Truly great investing success - stocks that increase 5, 10, even 100 times your original investment - happen when the underlying companies can grow to massive market capitalizations.

Companies only grow to massive market capitalizations when they have immense addressable markets to support immense revenue generation.

Am I going too fast?

Simply put, look for companies that offer solutions or products needed by a LOT of consumers and/or businesses. The total addressable market (TAM) should be reasonably 10 times or more the company's current revenue run rate (the higher the multiple, the better). And the company should be generating at least 10% revenue growth annually (again, the more the better). These two factors help ensure that your stock can increase its market capitalization for many years to come.

1 2 3
View single page >> |

Disclaimer: The content is provided by Alexander Online Properties LLC (AOP LLC) for informational purposes only. The material should not be considered as investment advice or used as the basis ...

How did you like this article? Let us know so we can better customize your reading experience.


Leave a comment to automatically be entered into our contest to win a free Echo Show.