Growing Rich - Arabictrader.com

KIRK KAZANJIAN
LOOKING FROM THE TOP DOWN
Before Elizabeth Bramwell considers buying a specific stock, she
takes a broad look at both the world and the economy. It’s what’s
called a “top-down” approach. In other words, she wants to find out
the direction of inflation and interest rates, along with the shape of
the global political landscape and how the U.S. dollar stacks up against
foreign currencies.
From there, she comes up with a list of themes that are likely to
do well in the future. For example, Bramwell expects technology to
lead the way for growth in the twenty-first century. Specifically, she
is attracted to companies that use technology well to gain a competitive
advantage. “Technology accounts for about half of all U.S. capital
spending,” she says. “The ability to use technology effectively
allows you to increase both your revenues and productivity. The
bigger you are, the more you can use technology to achieve economies
of scale.” Using these themes, she looks for individual companies that
will prosper if her hypotheses are correct. Specifically, she searches
for leaders in their respective industries that can be bought at a
reasonable price. “I’m looking for individual stocks,” she adds. “I don’t
try to run my portfolio on a sector basis. If I have a lot of stocks in
any one area, it’s because that’s where I think the opportunities are.”
Bramwell gathers ideas from many sources, including personal and
anecdotal observation, the general press, and the brokerage community.
She also reads various research reports, goes through several
daily newspapers, and scrounges through the mounds of information
that arrive in her office each day. Is it good information? Not always.
That’s why Bramwell must rely on sound judgment and her own diligent
research before making any buy or sell decision.
GET THE EARLY EDGE
Whether you manage millions of dollars, like the experts in this
book, or a small personal portfolio worth much less, the way you
make big gains in growth stocks is by being the first to recognize and
understand a new theme. In other words, you want to buy shares in
the next Microsoft or Wal-Mart before it gets “discovered” by the rest
of Wall Street. That’s because if you’re in early, and hold for the long
haul, you’ll get to sit back and watch the value of your shares grow
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