When I was a 14 years old, I had an uncle who taught me about the stock market and the world of investing. In that same year I began to play a game where I would pick stocks using play money and then I followed those stocks over the course of the year. Since I didn’t know anything about most of the companies in the Dow or S&P500 and because my family didn’t have the money to get me a subscription to the Wall Street Journal, investing was a complicated game. As a result I lost much of my play money.
In my freshman year in high school, one of our teachers had a pamphlet on his desk entitled Rules for Investing in the Stock Market. I quickly asked if I could borrow it and I wrote down the six rules and they were as follows.
Always by Brand Names that you know and trust.
Buy companies who are leaders in market share in their particular industries, the higher share the better!
Buy shares in corporations if you have used their product and had a great experience with everything they produce.
Okay, as a 14 year old this made sense to me, the next three rules required some investigation.
Buy company stock only where you see quality management and a successful track record.
Buy stocks that pay dividends consistently over five or ten years
Make Quality your most important rule, Quality Companies, Quality Products. Quality Brands, Quality Management and Quality Dividends.
This does not work in short term investing but if you have a long runway until retirement, this simple idea of Quality will go a long way in creating a portfolio of stocks that will pay you back for a lifetime of investing.