Stock Selection Criteria
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Questions and Answers

What is the recommended number of stocks to have on your list when getting started as a do-it-yourself investor?

  • Less than 10 stocks
  • More than 100 stocks
  • 10 to 20 stocks
  • 50 to 100 stocks (correct)
  • What is the purpose of settling on an investment strategy and writing it down?

  • To limit your investment options
  • To help you concentrate on only certain kinds of stocks (correct)
  • To increase the number of stocks on your list
  • To diversify your investment portfolio
  • What is the next step after making sure you have a list of 50 to 100 stocks?

  • Investing in all the listed stocks
  • Conducting a preliminary screening (correct)
  • Analyzing the company's stock performance
  • Seeking assistance from a financial advisor
  • What is the purpose of reviewing your list and asking yourself about which companies you understand?

    <p>To reduce the number of stocks on your list</p> Signup and view all the answers

    What should you consider when making a fair and reasonable call about a company's future profitability?

    <p>The industry in which the company operates</p> Signup and view all the answers

    What is the purpose of practicing stock tracking and investing?

    <p>To become familiar with stock market trends</p> Signup and view all the answers

    What is the primary goal of researching mutual funds' stock holdings?

    <p>To identify potential stocks for purchase</p> Signup and view all the answers

    What is the purpose of reviewing the list of potential stocks to invest in?

    <p>To eliminate stocks that do not match investment criteria</p> Signup and view all the answers

    What is the suggested number of stocks to aim for as prime candidates for purchase?

    <p>10</p> Signup and view all the answers

    What does the author recommend doing after getting the list down to no more than ten stocks?

    <p>Conduct in-depth research on each stock's products and services</p> Signup and view all the answers

    What cautionary advice does the author provide for investing in unfamiliar industries or companies?

    <p>To thoroughly understand the company or industry before investing</p> Signup and view all the answers

    How can an individual obtain a company's annual report?

    <p>By contacting the company directly or visiting its website</p> Signup and view all the answers

    What is the purpose of visiting the Public Register’s Annual Reports Service Web site?

    <p>To download free copies of annual reports</p> Signup and view all the answers

    What is the author's view on investing in 'hot stocks' without understanding the underlying companies?

    <p>'Hot stocks' should be avoided without understanding the underlying companies</p> Signup and view all the answers

    'Never buy a stock in a company or industry that you don’t understand' implies:

    <p>'Hot stocks' may be misleading without understanding the industry</p> Signup and view all the answers

    Selecting 50 to 100 stocks is the first step recommended by the author when getting started as a do-it-yourself investor in stocks.

    <p>True</p> Signup and view all the answers

    The author suggests that the resulting list of stocks after preliminary screening may be as few as 10.

    <p>False</p> Signup and view all the answers

    According to the author, it is important to make cuts in your list of selected companies based on your understanding and ability to make a fair and reasonable call about their future profitability.

    <p>True</p> Signup and view all the answers

    The author recommends relying solely on intuition when picking stocks.

    <p>False</p> Signup and view all the answers

    The techniques described in Chapter 4 help in coming up with a list of potential stocks.

    <p>True</p> Signup and view all the answers

    The author recommends concentrating on certain kinds of stocks based mainly on size and risk.

    <p>True</p> Signup and view all the answers

    Reviewing mutual funds' stock holdings is an important step in selecting potential stocks for investment.

    <p>True</p> Signup and view all the answers

    The author recommends having no more than 20 stocks on your list when getting started as a do-it-yourself investor.

    <p>False</p> Signup and view all the answers

    The author suggests researching the eight criteria for each stock on your list before making a final decision.

    <p>True</p> Signup and view all the answers

    The goal is to use tools and research resources to cut the list of potential stocks to invest in from 50 or so down to fewer than five candidates for actual purchase.

    <p>True</p> Signup and view all the answers

    The author advises against investing in 'hot stocks' without understanding the underlying companies.

    <p>True</p> Signup and view all the answers

    The author recommends selecting one to three stocks for purchase after reducing the list to no more than ten prime candidates.

    <p>True</p> Signup and view all the answers

    The purpose of visiting the Public Register’s Annual Reports Service Web site is to obtain printed copies of annual reports.

    <p>True</p> Signup and view all the answers

    The author suggests cutting out 10 or 15 stocks from the list to get down to a more manageable number to work with.

    <p>True</p> Signup and view all the answers

    The author advises considering a company's product, staying power, and industry growth potential before investing in its stock.

    <p>True</p> Signup and view all the answers

    An individual can obtain a company's annual report by visiting the company’s Web site and requesting or downloading it.

    <p>True</p> Signup and view all the answers

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