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1.   What Should Be Considered for a Broker?

Charles Schwab Online seems to provide a considerable amount of information for those who make their own investment decisions.  The website is extremely easy to read and navigate.  So very much can be done online at:  www.schwab.com.   They are based out of Texas, and someone can be very easily contacted.  Schwab has a multi-point verification to log-on, which we think is extremely important.

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2.   There Are So Many Different Areas - Where to Start?

Well, everyone ideally informs themselves and makes their own investment decisions.  For us, we do not like 'penny stocks' and don't invest in options trading.  We are long-term investors in high-quality companies that generally pay a dividend.  Each company is monitored quarterly and for news items.  Mostly we have companies - not ETF's or other funds in general.  In addition to the news in general provided online by Charles Schwab, we like CNBC for the news that they provide.

One research website that we use is www.stockanalysis.com, which has a very good free research access and look-up ability.

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3.   Points and Sayings That Are Important

When choosing how and where to invest there are a number of different points that we have heard that seem so wise and true that we have jotted-down over the years - from CNBC news stories and announcers, The Wall Street Journal and the like, and from Family:

It's always good to have an individual business pay a dividend, because generally to pay a dividend they have to be making money.  A dividend builds on itself, and causes the number of shares to increase - simply by just buying more shares.  These are called D.R.I.P.S.

Don't Trade on Emotion!

Follow trend-lines, not headlines.

When choosing a company to invest in, think what a company will be worth seven years from now.

You can't put technology back in the box!

Don't try to catch a falling knife - a stock is going down (falling) for a reason!

 

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4.   What is P/E -vs- Forward P/E

P/E means Price to Earnings - one of the most important part in choosing a stock, not necessarily the price.

 

Let's take Microsoft - MSFT as an example.  Here is Microsoft's current Price to Earnings:

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5.   Which P/E is More Useful?

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6.   What Do The P/E Numbers Mean?

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7.   What is the PEG Ratio?

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8.   What Is Beta?

 

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9.  ETF's or Stocks?

3 Reasons You Should Own Individual Stocks Over ETFs

• Most ETFs are massively weighted to a few companies, so you're not as diversified as you think.

• Broad market ETFs, like S&P 500 funds, are full of companies that won't be around in 10 years.

• By investing directly in stocks, you learn about business, and in turn, become a better investor.

 

In 2021, Citywire reported that the largest constituents in the S&P 500 have accounted for over 40% of the total return for the index over a five-year period.

The data indicated that about 1% of the stocks in most S&P 500 ETFs are driving the lion's share of the overall returns.

With broad-market ETFs, you're essentially buying the 5-10 largest companies on the market, but only getting a fraction of the potential upside.

 

There are failing companies in the S&P 500

According to forecasts by consulting firm, Innosight, nearly 50% of the companies currently in the S&P 500 will be replaced over the next decade.

Companies get replaced in the S&P 500 when their stock prices fall enough to no longer be representative of the 500 largest U.S. companies by market cap. This means that nearly half of the stocks in the index today are likely future losers, and some of them are potentially headed for bankruptcy.

Owning stocks makes you smarter

But, one very important thing you'll miss out on when buying only ETFs is learning how businesses work. By foregoing the research process, you're also foregoing the opportunity to get smarter along the way.  Investing directly in stocks is certainly more work, and there's no guarantee that you'll beat the market. But it forces you to learn how companies make money, and over time you'll start to recognize patterns that separate great businesses from the average ones.  In doing so, you'll become an exponentially better investor. Those that invest exclusively in ETFs do not experience this intellectual compounding effect because they are not diving into the details of the underlying businesses.
 

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