Growing Rich - Arabictrader.com

GROWING RICH WITH GROWTH STOCKS
the guts of a business, figure out how it operates, and learn about its
major problems and opportunities by talking with the people in charge.
It’s like getting a lecture from a college professor who knows a lot
more about a certain subject than you do.”
Davis’s reporter instincts come from experience. He worked for the
Princeton student newspaper and is comfortable asking questions and
taking notes. “When I started out, companies were flattered that you
took the time to come and see them,” he recalls. “Now they are all
shielded by investor relations departments and public relations firms.
They have conference calls, and information is disseminated in a
much quicker fashion. But I still feel the principle remains the same.
People make companies, so you should get to know them. What do
you have to lose? It is a time-consuming process, and there’s no
guarantee you won’t be badly misled by some of these guys. That has
happened to me more than once. But there’s no substitute for that
face-to-face interaction.”
An in-depth meeting can also help you come up with a list of good
reasons to terminate your partnership with a company. “If managers
fail to do something they promise, if they start fooling with the accounting,
or if the story keeps changing, you might want to move
on,” Davis advises. “Or if you see top management selling a lot of
their own stock, while at the same time telling you what a great
company they have and how wonderful the future looks, it should
definitely send up a warning flag.
“Above all, we sit down with the people running the companies to
discuss the fundamental dynamics of their business,” Davis adds.
“Essential to our thinking is that the goal of research is to separate
the company managements who are the ‘bluffers’ from those who are
the ‘doers.’ Bluffers always have an excuse when things don’t turn
out as they expect.”
ACCESS FOR THE SMALL INVESTOR
If you’re not a big investor, like Davis, chances are you won’t land
a personal meeting with the CEO of a major corporation. But there
are other ways to find out what kind of people run the show. Start
with a call to the investor relations (IR) department. You might be
surprised by how much you can learn from talking with these folks.
Most are in direct contact with top company brass. Beyond that, look
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