HomeHome SearchSearch MenuMenu Our productsOur products

Size matters when it comes to finding a good stock to invest in, but don't focus entirely on management

by , 23 July 2014

If your investment strategy is to find solid companies to invest in for the long haul, there are certain things that can indicate whether a business will stand the test of time.

One of these crucial factors is the size of a company. It can tell you a lot about what the future could hold for the business and you as a shareholder.

Investors put a lot of weight on a company's management. But should you be bothered?

Let's take a closer look…

A company with cost advantages is a big plus

When searching for good stocks to invest in for your long-term portfolio, size is a big issue.

The larger a company, the more it can benefit from economies of scale.

Economies of scale simply means that a company can spread the cost of making something across many units. And this means big companies can make things at a lower cost than its smaller competitors can.

Not only that, it means they can buy goods and services cheaper too. Their big size means they can negotiate the best discounts, Phil Oakley in Money Week explains.

This all leads to better profit margins and helps to keep competitors at bay.

Should you worry about a company’s management?

A company with good management is important. But it’s not the be all and end all of investing.

Peter Lynch, an infamous US investor, once said: “Invest in a business that any idiot could run because one day one will.”

Large companies tend to keep management on their toes. And those not performing don’t tend to last long as shareholders want to see results where it matters: In the accounts.

So there you have it, why size matters when it comes to finding a good stock to invest in, but don’t focus entirely on management.

*********** Recommended Product ************

Revealed: The Law of Inevitable Profits

To get extraordinary gains, you have to do something extraordinarily different.

Which is why I want to show you how you can use this law to bank 416.25%... In just a few weeks!

If you want these gains, this law is the ONLY way to make this happen!

*******************************************



Size matters when it comes to finding a good stock to invest in, but don't focus entirely on management
Rate this article    
Note: 5 of 1 vote

Related articles



Related articles




Trending Topics