Chapter 8
How to Select the Right Investments
This is an important chapter. It will tell you two important ideas, what stocks, to buy and what stocks not to buy. Later on in additional chapters I added after I wrote this, I will explain how to choose ETF's and LEAPs. What not to buy is easier to tell you then what to buy is. What not to buy usually includes preferred stocks, stocks with large dividends, stock at high share prices, and stocks with small high – low yearly price differences. It is easier to give examples and show what I mean. I'm looking at the January 11, 1988 Barron’s stock table for the New York Stock Exchange. Right in the beginning, I find a preferred stock (they're very easy to identify because next to the name of the stock, you'll see "PF". Also, you'll see the annual dividend amount the stock pays. Common stocks will be blank in Adobe Acrobat version. Preferred stocks have a fixed dividend and are primarily for investors who want income. I’ll copy the whole line for a couple of preferred stocks and show you why they usually aren't good candidates for the system.
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