From Ken Little,
Your Guide to Stocks.
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Are you a “glass is half full or half empty” investor in stocks?

That’s a non-traditional way of saying that there is more than one way of looking at most investment opportunities.

“Smart Money,” the magazine published by the “Wall Street Journal,” has a regular feature where two investment professionals look at the same stock.

One takes the positive and the other the negative.

In many cases, it’s a matter of perspective. The professional stock picker taking the positive side cites those aspects of the company’s financial statements that he or she believes will help fuel future grow (low debt, solid market position, and so on).

Stock Perspective

The person taking the negative look sees a different future. Their opinion usually cites too much risk (tough competitors, for example) or shrinking markets. They often make the case that there are better and safer alternatives.

The point is even professionals will differ – often dramatically – on the future of a company and its stock.

Some investment decisions are easy. If the company is in horrible financial shape and facing legal and tax problems, why buy the aggravation?

However, many decisions aren’t that clear cut, especially when put in the context of other opportunities that may be available.

Questions

Here are some questions to prompt your thinking about a stock that could go either way:

• What has to happen for the company to get moving? The more things that need to happen before a company gets on the road to substantial growth, the less likely it will happen.
• Is the company at a tipping point? Pardon the cliché, but can a new management team make the difference? Good companies that go stale can often be re-energized by new management or ownership.
• Is the market/economy headed their way? There is much to be said for being in the right place at the right time with the right products.

You can probably think of other questions that are appropriate to specific investment decisions you face.

Keep asking questions and finding answers and you’ll make better investment decisions.