Effective growth investing lessons from master investors
How do you achieve sustainable growth in investing? One needs to choose those leading companies that are prepared to provide strong, consistent and long-term increases in profits and revenue. These are the firms that reward their shareholders with above-average market returns.
Apply these tips coming from some of the most experienced investing leaders. See how you, too, can discover the latest winning growth stocks and, thereby, make a fortune for yourself.
1. Go for Quality
The best investment choices are often the best businesses you can find. David Gardner, popular investor and co-founder of Motley Fool says, "I look for the excellent, buy the excellent and add to the excellent in time. However, what I sell is the mediocre. That is my investment style."
Quality companies possess the most powerful competitive edge, the widest market potentials and a top-of-the-line management. They know how to be creative, trend-setting and pioneering. Most of all, they can build wealth for their shareholders and lead others to achieve their dreams.
2 & 3. Jump in as early as you can; and grab that basement-price offer
You can maximize your profit by investing early in a great business as more investors join in the harvest. Wealth abounds for those who practice this principle – especially for the 10- and also the 100-baggers – bringing on life-changing gains.
Nevertheless, many investors frequently hesitate to enter into the early-stage surge of best growth company stocks because they appear pricey, only to regret having missed the opportunity to gain in the end. While buying stocks in these quality businesses at high prices is an option, we can decide to go ahead and pay the premium for a quality acquisition. Setting your targets too low or just a notch or two below the optimum level might cause you to lose the opportunity to hit a multi-bagger.
4. Invest on a long-term duration
Warren Buffett puts it this way: "My favorite holding period is forever." CEO and master investor, Tom Gardner, in fact, has established at Motley Fool at least a five-year holding time rule in an Everlasting Portfolio since he adheres to the effectiveness of holding stock on a long-term basis. In David Gardner’s words, as a prime mover of one of the most efficient high-growth investment-consultancy services in the world, the heart of this investment approach consists of “two keys. . ., stock by stock: In before the big majority of people, and out after the big majority of people”.
Aiming to buy stocks in businesses and holding on to them for years or even decades allows the power of tax-deferred compounded returns to our advantage.
5. Those who win keep on winning
Tom and David Gardner reveal another winning advice: Invest in businesses and management groups with unequalled track record of success. In their tweeted message, they say:
“Our take on that famous disclaimer: ‘Past performance’ may turn out to be the single *best* determinant of future results we have can.”
Although it is not guaranteed, winning can be made into a habit. The force of momentum and the trusted experience developed in past successes tend to favor those who continue to face investment risks. And we do not refer to foolhardy risk-taking based on pride, but well-informed, facts-based choices born out of positive and strategic projections of a fruitful future.
6. Let your portfolio speak your best to the world
David Gardner once gave this valuable advice: "Determine where the world is headed; and as soon as you can, get there." Your portfolio speaks of your aspirations, interests, specialization and profession – that is where your advantage lies. Above all, your portfolio runs parallel to the trajectory of your vision of the future—and with a more positive view, the clearer the vision is.
7. Do not give up the fight
Growth investing can be frustrating at times; there will be moments when you harbor doubts and want to give up. Certain inexplicable short-term fluctuations and extreme bear market dips may wreak havoc on top-quality yet usually high-priced growth stocks, taking a toll on your emotions. Ultimately, the only path to success is to remain steadfast throughout any undesirable turn of event.
“The short-term will not teach an investor to learn enough – usually in a significant way -- to be so successful in the long-term,” according to Tom Gardner.
Be assured with the knowledge that everything will pass and, thus, you must expect the big-league companies to come out victorious after the dust clears up, remaining stable while the rest of the bunch lose their market share. With that in mind, consider such sell-offs as potential moments for strengthening your positions at even higher prices and enhancing your long-term returns.
Tags: Bellmore Group Management Services, Tokyo Japan