How do you evaluate the long-term potential of stocks?

Question

How do you evaluate the long-term potential of stocks?

Answer 1

The stock market reflects earnings potential. Who is going to earn the greatest profit in the long term? If you can answer that you will win.

Answer 2

If your investment horizon is pretty long term (at least a couple years), read up on how Warren Buffett evaluates a company.  I suggest you read The Warren Buffett Way.  Read Jim Cramer's books and I believe Peter Lynch has also written a book or two on growth stock investing.  

The bottom line is that there are a gazillion ways to evaluate stocks.  You need to figure out your own strengths and weaknesses (are you math oriented, able to understand financial statements, or are you good at evaluating new market fads and trends, or do you like to look at stock charts?)  Once you figure out what style of investing interests you most, then do some research and figure out the best way to attack the problem at hand.

Good luck!

Scott Cole

www.kungfutrader.com

www.theultimatestocktradingsystem.com