Retirement & Financial Planning Report

Now that Internet-led tech stock mania has cooled off, the hunt for solid investments should focus on future earnings. The world has become less predictable, which means huge opportunities for growth in some areas. However, you have to look carefully to find those opportunities. Before buying, ask:

  • Which companies are the first movers in an industry?

  • Are they likely to sustain early leadership?

    How much cash flow is likely to be generated?

  • Is the balance sheet likely to get better or worse?

All of these questions need to be answered favorably if you’re to hold down risks. You’re better off buying the “best of breed,” even if you have to pay more. Most of all, focus on cash flow. Look for companies generating positive cash flow, or likely to do so, and pay reasonable prices for those future cash flows. Therefore, fundamental analysis is still vital for investment decisions.


Quantitative and momentum strategies don’t hold up well in the long run. In today’s market, an important component of stock picking is determining how the New Economy is going to affect the operations of Old Economy companies. Leading drugstore and supermarket chains, for instance, have learned to deploy technology successfully.


You still need to perform fundamental analysis, based on cash flow, and that cash flow is likely to result from a better product or a lower price. For example, Intel keeps delivering more powerful chips for the same price as the old ones.”


Besides Intel, what other stocks look attractive these days? Here are the ones mutual fund managers are holding: Cisco Systems; Microsoft; Home Depot; Sun Microsystems; General Electric; Oracle; Texas Instruments; Pfizer; Citigroup, and Wal-Mart.