Tuesday, January 27, 2009

One Approach to Investing

A wise teacher once told me, "Common horse sense is not so common." And investors seem to overlook common sense now and again.

Let's say we stop the presses right now. We disconnect the Internet and Satellite TV, and push all of the papers and magazines on our desks into a cardboard box.

We sit at our desks in complete silence.

Without referring to any notes, commentators, or anything else - try to rely on everything you've learned up to this point in your life.

Now ask yourself, "Which sectors have the greatest upside potential over the next 2 to 5 years?"

Home healthcare? The Internet? Defense? E-commerce? Natural resources? Online gaming? Write down your answers and use them to begin your stock-selection process.

That's how I start my process. I start with the sector that has the greatest upside potential - and work back from there.

Ask yourself which sectors "should" do well based on everything you know up to this point. Your answers will amaze you. Sure, you'll be off the mark once in a while. But most of the time you'll be right on the money.

By Charles Newcastle

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