There are always many more stock ideas that make me think, "No!" than make me think, "Yes!" In fact, there are thousands of reasons to say no to a given stock -- and only a handful of reasons to say yes.
And in the long run, we're all better off being picky.
The power word
Most of us hate hearing the word "no," especially if it means not getting a juicy raise or realizing that a new flat-screen TV, game console, or designer handbag just isn't in the budget.
Of course, it's a powerful word, too, and we learn that fact quite early -- much to our parents' chagrin. As seemingly negative as "no" might be, after all, it saves us from breaking the bank, from busting the budget -- and from wasting our hard-earned money on a stock that just isn't worth it.
Here are a few of the situations that find me shaking my head.
Questionable moat? Nope! There are tons of things I like about Google
Debt-laden balance sheet? No way, no how! Movie-rental bigwig Blockbuster
I don't understand the industry? Uh-uh. A dry ship? Isn't that an oxymoron? DryShips
Oui, da, si, ja ... yes!
So why would I say "yes"? Four primary reasons:
- Strong competitive advantage.
- Strong balance sheet.
- Great management.
- Room for growth.
And if it's got all of these and is also trading at reasonable levels? (And let's face it, these days "reasonable levels" are common, given the bear market conditions.) Then I shout "Yes!" from the rooftops.
So what stocks are making me shout "yes" right now? Marvel
Both are recommendations of our Motley Fool Stock Advisor investment service -- and they're not the only ones.
Find your positive side -- and positive returns
Casting a critical eye on stock ideas and exerting enough pickiness to say "no" will make you a better investor in the long run -- because saying "yes" too readily will most certainly endanger your returns.
David and Tom Gardner are very careful about what they say yes to -- and that's why their recommendations in Stock Advisor are beating the S&P 500 by nearly 30 percentage points. If you'd like to see what they're recommending for new money now, just click here to get started -- there's no obligation to subscribe.
Alyce Lomax does not own shares of any of the companies mentioned. Marvel Entertainment, Dolby Laboratories, and Netflix are Motley Fool Stock Advisor recommendations. Google is a Rule Breakers recommendation. The Fool's disclosure policy says "yes" to transparency.