20. Warren Buffett’s 3rd rule – A stock must be stable and understandable

Videos
Download Preston’s 1 page checklist for finding great stock picks: http://buffettsbooks.com/checklist

Preston Pysh is the #1 selling Amazon author of two books on Warren Buffett. The books can be found at the following location:

In this lesson, students learned the importance of stability. The most important reason why we must pick a stable stock is because we’re unable to accurately predict the growth of the earnings without stability. If a company has an unstable past, it is possible that their future will become stable – it’s just less likely than a company that’s already demonstrated those attributes. I like to think that companies perform and act like individual people you might know. Some people are very conservative and grow their assets at a nice and controlled pace. Others do not. As you look at that example, it becomes obvious that the person that manages their finances conservatively will be easier to predict future performance. This is very important as we move to the next lesson and learn to calculate the intrinsic value of a stock.

Articles You May Like

7 F-Rated Stocks to Sell Before We Reach Christmas
3 Stocks to Buy to Benefit from a Looming Energy Crisis
Thank You, 2022, for Giving Offering Such Bullish Opportunities
7 Tech Stocks That Could Make Huge Moves in December
Which Stocks Should You Be Invested In for the “New Regime” Rally of 2023?