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Hello my friends, for those of you who already invest in the stock market, you understand that feeling: that moment when you select which stock you're going to buy, you do your research, your studies, your analyses throughout the month, you put your hard-earned money in the brokerage account, and you prepare to place your orders, go for it!
But who hasn't experienced this? On the day you're going to buy your stocks, or even a few days before, a news item in the market, a tweet from someone you follow, a video from a Gol influencer, changes your mind, and you go and buy in different proportions, buy a different asset, stop diversifying, and the correct investment you've studied for so long...
Did you know that when you're actually going to buy your investments, you could do a very quick checklist to check certain stocks and certain criteria? Why did you select those stocks? This will help you in the long run. There's a book that talks about this, it's Peter Lynch's book, "The Peter Lynch Way of Investing." Did you know that there is a quick checklist that you can check before you place your orders with the brokerage account?
And this quick checklist is in the book "The Peter Lynch Way." Lynch's Way of Investing: If you don't know the checklist and if you don't know the internet, you should stay until the end of this video. Greetings, my friends from Recharge, the creator of the Frenetic Business blog, and today I'm going to give you some more digestible content.
I'm going to show you here, look at the bunch of books on investing that we're reading and doing residencies on. Fantastic for you! One book today is Peter Lynch's Way of Investing, and I've already read it several times. I've already made a video (I'll leave it in the description below) about the six types of companies the author talks about in this book.
It would be very interesting; you can watch this video first or that one first, it doesn't matter, both will complement each other. If this is your first time here on the channel, subscribe to our channel and hit the notification bell. You're getting your Diana, the great investor, small investor, beginner, long-term investor.
Books will always help you. I'm here to help you choose the books, give reading tips, and how I'm applying my knowledge to my investments. So let's go straight to the video, where I'll talk about two things: who is in charge of Elite and something about this book, and of course I'll... Let me show you a quick checklist that you should read before placing your orders with the brokerage.
It explains why you should think about the stocks you're interested in, and it's very worthwhile to read about them. You'll understand a little more about the story of Peter Lynch by reading this book we 're talking about, "The Peter Lynch Way of Investing." It's a very simple and great book, and just like I mentioned in another video of mine (which I'll leave in the description below) about "The Magic Formula," these are two simple books I've read.
They're very good books when you activate them. And if you're starting your investments this year, don't worry, you'll read this book and you'll like it a lot. And if you're not used to reading, don't worry either, you'll read slowly, five pages a day will help you a lot. But let's focus on Peter Lynch.
Many people knew him as a famous fund manager in the United States who achieved an average annual return of 30 percent on his investments. When we talk about an average annual return, we 're talking about 15-20 consecutive years. Adding up all the averages/ number of years, it averaged thirty percent per year.
Nowadays, if you take a fixed income investment and make a more conservative investment, you'll be able to achieve six, seven, eight percent in six percent, which is a lot. And in the long term, if the sum of the years continues to show this high percentage, compound interest, the Snowball Effect of Buffett's time, will yield significant results.
So you have to respect that. If this guy writes a book, he's asking about his approach to investments, the way he selects these assets. This book is divided into three parts: what he does to prepare you to invest, understanding the stock market and how stocks work, what stocks are, how you invest in companies as a whole (several very good chapters), and another part focused on selecting winners.
That one will talk about fundamental indices and what he did as a manager to select assets—companies that he thought, if approved, would give much higher returns. And of course, the third part shows why and how he makes his long-term strategy. Now, if you want to save more time with your studies, take advantage of this video and follow this tip: read the entire book, which is a lot of information.
And if you... Don't bother reading the book, it's okay, everything's good, go to the end of the video where Kristy is, and below is a description of the best videos on the Glitter channel, some great tips and fantastic reviews for you to start or improve your investments. Fantastic, my friends! So let's go.
In the first part of this quick checklist, I'll comment on four very important points for everyone. First, the P/E ratio. This P/E ratio is high for companies in the same sector, so you'll be able to direct your investment with a greater margin of safety. It's so important that this P/E ratio is extremely used in literature.
If you take the book "The Journal and I Follow," there are chapters dedicated to this relationship of greater safety with P/E. If you take an EP with the intelligent investor Benjamin Garra, it also hits this ground a lot for discounted values and more security. You can also take a Magic Formula like the book "To Beat the Stock Market" by Diogo Indigo, he also talks about two aspects, one financial and one overpricing, and uses the P/E ratio in his analysis.
Second, super important information that you can use to direct your investments is to feel calm when you buy your... Regarding stocks, you need to evaluate what the top management, the owners of the company, are doing with the company's own shares. Are you buying shares in a company where you see that you and the directors are also investing?
This demonstrates a commitment to the company, and it's likely that this company won't be left to its own devices. The feeling is much more about ensuring that, of course, to finalize the checklist, we have to talk about money. Number three is profits. You need to look at the companies you're investing in, the shares you're buying, to see if they are profitable, productive, and profitable.
But you shouldn't focus on the short term. It's no use looking at last year's last quarterly results and thinking, "Wow, this revenue hit that quarterly result, I'm going to jump in right away." No, you have to look more carefully and see if their profits and dividends are recurring, persistent, and growing.
A good tip from the book is to do evaluations over at least five years. And when we talk about money, that's also the fourth point. From this checklist, we talk about cash flow and debt. You need to understand how much cash that company has. A robust cash flow can show that the company has a lot of surplus money, is making a lot of money, and a robust cash flow will also help prevent certain market fluctuations in that company because sometimes some speculators think that when a company has a lot of idle money, it might prioritize investments that won't work out very well; they might sell off some stock.
It's just a matter of being aware that this can happen historically. And of course, debt: how much does that company owe? Does it owe to banks a lot in long-term financing? When it owes to banks in a certain way, is it completely committed to banks and financial institutions? This is complicated, and you need to do these assessments as well: cash, profit, loss, cash flow, debt, dividends—all of this is very important.
From the moment you do this checklist with these four pieces of information in a general way for all sectors, you will be much more assured, and probably if something goes wrong, you will be a little safer than other people. So, my friends, this is the quick, relevant checklist. If you want more content, I highly recommend that you read the book that...
In addition to these tips, which are for general actions, meaning for various business sectors, of course the book has even more tips directed to each business sector that he himself classifies. If you don't know the classification, I've left a video below, and I've also left other videos that are directed to the books that I also commented on in this video, and I also reviewed these books.
If this is your first time here on the channel, I want to thank you very much for watching until the end. Comment below that you made it to the end and comment if you've read this book or are interested. Now I'm reading this book. I hope the different checklist helps your investments a lot. Have a great investment, and I hope to see you here next week in our next video. A big hug from Jean here from the René Business channel.
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