The Industry Approach To Common Stock Investing

Let us now suppose that the investor is interested in some other category than the public utilities and wonders just how to decide upon some particular common stock which he may feel is worth purchasing. How should he go about it? Certainly not by listening to "tips" or other misinformation. Certainly not by taking the "advice" of someone who is really not qualified to give it. Certainly not by paying any attention to "scare" headlines in the current papers. How, then, should he proceed?

All investment in common stocks requires both proper timing and proper choice. If one knows what to buy, there is also the problem of when to buy. We will all agree that hindsight is much easier to come by than foresight; anyone could easily have made that first million by being amply supplied with both. It is equally plain that certain industries have come a long way in the last decade or so; for example, the drugs, cements, electronics, and air conditioning. Many of these cannot be considered any longer as bargain-counter items, because of strong demand.

The aim of most investors is to buy under the general market, so that the purchase of items within those groups which are now at their peaks would, most certainly, be open to question unless one thinks that they may go even higher!

Perhaps the really smart thing might be deliberately to pick a certain industry which seems to have lagged behind the general parade and shows evidence of having been neglected because it lacks current "glamour" in the eyes of the investors, although lowered price does not always indicate a bargain price.

Supposing such an industry has been spotted, then the next step might be to find a particular stock within that segment which seems to offer interesting possibilities and to compare it with others in the same field with regard to the immediate and the long-term outlook.