Our beginners' investing series turns its attention to the search for ideas.
Last time in this series on investing for beginners, we had a look at various investment strategies, and I concluded with the suggestion that beginners are best off starting with solid blue-chip shares with a "forever" investing horizon.
But we haven't looked yet at how we obtain the information we need and where we get our actual ideas from.
By that, I don't just mean where we get the raw data from, because if anything we have an overabundance of that these days. Click on this link for Tesco (LSE: TSCO), for example, and you'll see a number of tabs there.
Numbers everywhere
You'll see Fundamentals, with a summary of the past few years' profits, earnings per share, dividends and more. And there's a link to get further details of past results. There's another tab showing forecasts and, well, click around the other tabs and have a look for yourself.
And these days, most companies have their own websites with investor sections, where you can get copies of their full financial reports. They're usually in PDF format, and often go back up to five years.
But all together, that's a huge amount of information across the whole market, and your eyes are likely to bleed before you'll come up with ideas if you try to read too much of it. So how do we narrow it down?
Just look around you
One thing I like to do is take a look around me, at the products and services that occupy my life, and think about who produces them. Do you drink PG Tips tea, spread Colman's mustard on your roast beef, wash your clothes in Persil, clean the sink with Cif? Do you think they're good products with a long lifetime ahead of them?
Well, see if you can find out which companies make them and think about their long-term prospects -- and do it before you even take a look at any financial figures.
Do you wince when you get your gas and electric bills, cringe at the cost of mobile phone calls, and wonder where all the money is going? A good chunk of it is going into the pockets of shareholders, so check out the companies and see how profitable they are.
Talk about it
Getting other people's thoughts is a great help as well, and it's one of the greatest advances the internet has brought us -- but don't forget, idiots and geniuses have equal access to it! The Fool has discussion boards for most big UK companies, and sector boards for companies with no dedicated boards, so use them to ask questions and gauge opinions.
Another thing I like to do, and I've been doing it since the pre-internet days when I used to get my information from the weekend Financial Times, is check which companies are reporting each week and see if any of them grab me -- you can use the Fool's Week Ahead articles to keep up. That way, over the course of a year, I've at least had a quick glance at every company on the market.
Anyway, those are just a few ways to get some ideas -- please feel free to share any of your own approaches in the Comments section below.
Next time we'll make our first "purchase" for the Beginners Portfolio -- we won't be using real money, but we'll treat it exactly as if we were.
And if you haven't already checked those brands I listed above, would you be surprised to learn they're all Unilever (LSE: ULVR) products?
At last -- a special free report that introduces novices to shares! "What Every New Investor Needs To Know" and The Motley Fool are helping Britain invest. Better.
More in this series:
> Alan does not own any shares mentioned in this article.
