Tuesday, December 16, 2008

"Explain Why You Are Buying" -- Revisited

Earlier this year, an article on this blog titled "Explain Why You Are Buying" (link) described why it is important for us to be able to make a "clear, concise, and confident" explanation as to why a particular stock should be purchased. In support of this recommendation, this Covered Calls Advisor blog has begun providing a short explanation as to why a particular stock was selected for purchase. For example, the most recent newly established covered calls position was in Potash of Saskatchewan -- the second paragraph (link) provides a summary of this advisor's rationale for why Potash was determined to be a worthwhile buy.

What caused this advisor to 'revisit' this topic once again in this article? Today I was reading an article in Fortune titled "The best stocks for 2009" (link). While reading the article, I was struck by the exceptionally clear analysis and reasoning provided in support of why each stock had been selected as a 'buy' -- which reminded me once again of how important it is for each of us to take the time to make a "clear, concise, and confident" explanation of a particular stock before making a final commitment to the actual purchase decision.

Regards and Godspeed,
Jeff

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