Ever hear the saw "Investing is a marathon, not a sprint"? While it's easy to get caught up in the minutiae of day-to-day events "as the market turns," it becomes that much more important for Foolish investors to not let themselves get sucked up in the noise that moves stock prices like a world-class yo-yo champ slinging a Duncan original.
It behooves you to know at least three things that you're looking for in a potential investment. Otherwise you'll be lost before you even get started.
1. Stuff of legend
Investing legend Warren Buffett looks for businesses that generate superior returns on equity because it is a key indicator of not only how profitable the business is, but also how well the company's assets and leverage are being managed. One of his most well-known holdings, Coca-Cola
2. Inside info
Foolish investors know that insider ownership is usually a positive sign that management's interests are in line with shareholders'. Executives who don't "eat their own cooking" may have less incentive to make decisions in the best interest of the business, and ultimately shareholders pay the price. Take Panera Bread
3. Value, return to me!
Another popular axiom of Foolish investing is finding companies that create value for shareholders, whether it be in the form of dividends, share buybacks, or just plain-old reinvesting in the business. Companies that generate consistent cash flows need to do something productive with that cash, and shareholders should reap some of the benefits.
Johnson & Johnson
Then there are companies like Markel
Can I really have it all?
Put it all together and you may just find a company like Hasbro
These are just the kinds of stocks that lead analyst Jeff Fischer and his team look for every day at Motley Fool Pro, along with his strategy to make money in any market using long and short positions in a broad range of securities, including common stocks, publicly traded put and call options, and exchange-traded funds.
If you're interested, Jeff is opening Motley Fool PRO for a few days on Tuesday, Jan. 18. The service has been closed to new members since June. To learn more and receive a private invitation to join, simply enter your email address in the box below.