his is one of the
questions that I’m asked How do I beat the average you ask
the most and it’s an answer – well there’s a very logical
that I like to answer in two answer to this question. It comes
ways. from three very important
characteristics of any share.
The more technical or objective
way to answer it is to compare Firstly the share should be a
your performance to something leading company within the
concrete. For example the market industry ie within the top 100 by
average in the country that market capitalisation.
you’re in for us here in
Australia it’s the All Ordinaries Second the share should exhibit
index which has returned well the characteristics of a long
over 40% in the last few years. term uptrend ie starting in the
If you haven’t made a return of bottom left hand corner of the
this amount then you haven’t screen and finishing in the top
performed at a satisfactory right hand corner of the screen.
level. I know it’s a fairly cold
way of looking at things. Thirdly the share itself should
be outperforming the market
So consider this, it is a well average.
known fact that 80% of fund
managers don’t actually beat the If these three criteria are
market average. However being an applied to all shares within your
individual investor and not faced portfolio you will be selecting
with the same constraints you shares that are performing well
should comfortably be beating fundamentally. You will be
this average to consider yourself selecting shares have been moving
successful. in an upward direction so it is
easier to make money from them. The second way I answer questions
And you will be selecting shares on how well people should be
that are already performing doing is by asking them how well
better than the average. So they want to be doing. It is
logically the shares that you always fun to hear people umm and
have will be giving you the best err at this question because they
possible chance to outperform the simply don’t know. They don’t
market average. know what returns they want so
how will they ever know when
What do you want? they’ve achieved what they want.
About the Author:
Phil Wengier, VIC, Australia More Details about Successful Investing can be found here http://www.saratoga.com.au/safeinvesting. Phil Wengier is the owner of several companies. In particular Saratoga Pty Ltd has been on the Internet since 1993 helping many who wish to learn how to invest successfully.
Read more articles by:
Phil Wengier
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