Growing Rich with Growth Stocks

by Kirk Kazanjian

Foreword

".....Investing is an activity for all responsible adults. By setting aside today's gratification to ensure tomorrow's well-being, we demonstrate our maturity. These are hard lessons to learn. The temptation to spend today is great.....

.....Too many of us grow up without investment role models. The subject rarely comes up even in schools. We spend a lifetime finetuning our shopping skills, but we don't work nearly as hard at our investment skills. The same person who will drive across town to save a 50 cents on a six-pack cola will throw thousands of dollars at a stock or a mutual fund on the basis of a hot tip or an unsubstantiated rumor. We are, despite much well-intended educational efforts, a nation of investment illiterates. We need help. We need role models.

That's where Kirk Kazanjian's Growing Rich with Growth Stocks comes in. Kirk has gone right to the best investment role models out there. These experts share their secrets with Kirk, who in turn has translated their collective wisdom into a sound agenda for any investor looking to learn the ropes.In a field dominated by get-rich-quick schemes, Kirk has sought and found a different breed of investor, one who accumulates money throught diligent research and patience. The advice of these managers isn't flashy, it works.

Investment is a simple activity at its core. Buy low and sell high isn't a tough lesson to learn. It's just phenomenally difficult to put into practice. If you're going it alone, it can be maddening. With the counsel of these great investors at your side, however, the road will not only be smoother, it should also be much more profitable.

My best to you on your journey. May you truly grow rich with growth stocks."

----- Don Philips

Forget About the Market.

Take a long-term view of investing and ignore the day-to-day fluctuations of the economy, interest rates, and over stock market. These constantly changing variables have little or no impact on the companies in your portfolio.

Invest Like a Tortoise, Profit Like a Hare.

The real message for investors is this: On Wall Street, you truly get rich slowly, Don't be a trader. Buy quality companies and stick with them for the long haul. By doing so, one day you'll wake up and realize you have more money than you know what to do with. Without question, traders die poor, while investor prosper. Besides, as Peter Lynch often said, most of his money was made in the third or fourth year he owned a stock. Sometimes it took even longer.

Buy the Best at Bargain Prices.

Buy good business at the right prices. It is also often wise to concentrate on large, established companies with first-class management teams, predictable earnings, diverse product lines, pristine balance sheets, lean expense structures, innovation and successful international operations. One useful guideline for making sure you don't overpay is to stick with stocks you can purchase for PE below the companies' overall growth rate. Also, try not to purchase a stock selling for a PE that's greater than the PE of the index.

Take a Good Look Around You.

Always be on the lookout for promising investment ideas. Keep an eye on what products you use the most and what your kids are buying.Then, figure out how you can profit from them. In addition, look for broad trends in the economy and determine which companies are likely to benefit from them the most.

Get To Know Your Partners.

Always find out about top management before buying shares in a company. These people are your partners, and how they act will determine whether you make or lose money in both the long and short term. Make sure they have integrity and are "doers" not "bluffers".

Avoid Unnecessary Risk.

Never fail to evaluate the risks involved with every security you buy. With short-term bonds and cash, your greatest risk is that you'll earn an inferior return that might not keep up even with the rate of inflation. This is yet another reason why equity investing makes so much sense.Without question, stocks are inherently volatile. One way to reduce your risk is by concentrating on large corporations with proven staying power, low debt, and a diverse product line. Also pay attention to the price you for for your shares. The cheaper your entry point, the less downside exposure you face.

Travel Around the Globe, but Stay at Home.

Wise investors look to profit from the prosperity being enjoyed by countries around the world, not just the United States. However, instead of buying stocks on foreign soil, seek out American companies that derive a good portion of their earnings from overseas sales. US companies are more stable, closely regulated, easier to follow, and governed by strict accounting and regulatory standards. They also tend to be better run and are often fiercer competitors than their foreign counterparts.

Be Willing to Change.

You must be willing to alter your investment process to keep up with the changing times. Stock market techniques and theories that worked decades ago may no longer be relevant. Failing to adapt to current conditions can cause you to invest in companies and industries that are no longer growing, while preventing you from buying more promising prospects.

Never Underestimate the Power of Technology.

Technology stocks should be a part of every twenty-first-century investment portfolio. Since high-tech companies are inherently volatile, you can reduce your risk by sticking with some of the established names with diversified product lines, such as Intel, Motorola, HP and Microsoft. Furthermore, be on the lookout for companies in other industries that use technology well to reduce costs and increase profitability.

Read the Fine Print.

Pay special attention to the balance sheet. Is there plenty of cash on hand? At what pace are sales and earnings growing? How much debt has been taken on, and what is the money being used for? Use this information, not only to determine whether the company is financially strong, but also to figure out whether its current stock price is a bargain or too expensive based on the underlying fundamentals.

Don't Spread Yourself too Thin.

Keep a well-diversified portfolio of 20 to 30 companies from many different industries. This will reduce your overall risk, while making sure you have broad exposure to a well-rounded number of sectors.

Know When to Say Good-bye.

Some reasons to let go: The company's fundamentals begin to deteriorate; The stock meets your price target; You find a better company at a lower price; There is a secular shift in the industry that's bound to negatively impact the stock.