Of all the measures you can use to search for quality companies, the metric known as return on invested capital can be one of the trickiest.
While 2008 was a bad year for us individual investors, it was downright
nasty for the Wall Street smarty-pantses who started this mess.
After the worst year in more than half a century for dividends, investors need to rethink their strategies for income generation.
We all know that diversification can help you protect your portfolio
from volatility. But if you want to maximize your returns, you have to
be willing to invest with conviction.
So runs the thesis of my recurring Fool column "Get Ready for the Bounce,"
in which we search among the wreckage of Mr. Market's overturned
cutlery drawer, hoping to find future winners in a pile of 52-week
losers. But do we really need to sit around for a whole year, waiting
for a potential bouncer?
As fundamentals-focused long-term investors, Fools never base an
investment decision on the daily gyrations of the market. But the
market's daily price movements can be useful when looking for new stock
ideas for further research, or to keep tabs on watch-list stocks.
The New York Yankees of the '50s and the Chicago Bulls and Dallas
Cowboys of the '90s have one crucial element in common: consistent
excellence in their organizations and performance. That's a rare
accomplishment, but if you think it could never occur in your
portfolio, think again. Carefully chosen dividend-paying stocks could
be your key to superstar returns.
Why settle for ordinary quarterly reports?
I believe that a stock's biggest factor in beating the market is to first beat the market's expectations.
Leaving Wall Street's pros with puzzled expressions usually means that
these companies had more in the tank than expected, and capital
appreciation often follows.
Let's take a look at a few companies that humbled the prognosticators over the past few trading days.
Even on the market's worst days, buyout news and other short-term forces can send individual stocks up by 10%, 25%, even 50%.
"The bigger they are, the harder they fall." It's the worst nightmare
of every investor in today's market -- buying a rocket stock just
before it takes a nosedive.