Find companies you understand

When you buy a stock, you become a partial owner of a business. If you don't understand the business, you're setting yourself up for failure.

Would you trust yourself to take full ownership of a company whose business you don't understand? Even if you appoint great management, how are you supposed to know if they're doing a good job?

You can find companies anywhere. You use dozens of products and services every day, so take a moment to consider the companies behind them.

Also consider companies that may impact you indirectly. Many businesses don't ever deal directly with consumers. When you go to check out at the supermarket, who makes those machines that take your payment? When you buy your medicine at the pharmacy, who's actually making those drugs? What equipment are they using? When you get your car fixed by a mechanic, where do they buy new parts and who makes those spare parts? When the signal on your phone drops because there's not a cell tower in sight, who's really responsible for building new towers and who makes the equipment that goes on those towers?