In addition, I apply an augmented version of the Porter Five Forces model to determine whether companies are likely to maintain margins and grow to a size that enables further appreciation of the stock price.
 
The five forces that are considered are the negotiating power of suppliers, current competition in the market, the availability of substitute products, the threat of new entrants into the market, and the negotiating power of customers.
Some questions I reflect upon prior to investing in a stock include:
●       Will this company have higher revenue in 10 years?
●       Can competitors enter the industry and successfully compete?
●       Do shoppers demand this brand or comparison shop with competitors?
 
When the answers to these questions are “Yes!” then the company passes my sleep test. Because, when the stock price of these companies declinces, we still sleep like babies. Low prices are an opportunity to buy more stock, not lose sleep to anxiety and stress.
I believe that investors in these companies should share my confidence, experience enthusiasm in ownership, and remain confident when other investors are panicked.
 
A small portion of investments will be in smaller companies that I think are positioned for dominance and thus massive profits.
 
Remember, I own the same stocks you do.

ALPHA 2: COST

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