Mundy: The art of stock selection

The art of stock selection

What are the most important elements of stock selection? Most investors would claim successful stock picking requires holding a more informed view of a company's future than the majority.

Other investors would suggest following a systematic list of quantitative rules, while a smaller group – technical analysts – would seek to second guess the actions of others by studying price charts, but with absolutely no interest in forecasting the operational future of the company. Of these approaches, success through holding an informed view of the future is probably intellectually more appealing, but, as I have written previously, recognised experts in a field have very little ability to accurately forecast the future, when compared with a control group. Although many investors,...