In this difficult investment environment, it's a daunting task to choose which stocks to invest in. But there are some basic strategies that can help investors make the right selection even in these times.
When investing in stocks, it's important to look at the challenges companies face as they attempt to execute a business strategy. I call these headwinds and tailwinds.
Tailwinds include products and services at the forefront of an emerging trend, absence of significant challenges in cost structures, and intellectual property that allows a company to
charge a premium.
Headwinds are anything that create challenges as a company attempts to execute it's business plan.
Michael Dell has done an admirable job in attempting to turn Dell around. Still, the company faces significant challenges. Dell was founded on cost-effectiveness and a direct to consumer/business model. With the emergence of HP as a low-cost competitor that model is under pressure.