Investing for an Education
Little background - Currently a first year theoretical physics student on a four year course at a half target university in london. Extremely interested in moving towards an equity research position after graduation after reading quite extensively about it on WSO and other similar sites. So recently have been flicking through the FT from day to day to try to learn more about the industry but apart from that have little understanding of the investing world.
So to try to gain a basic understanding of the research/investing process, I was planning on utilising some of the money I saved from working over the last couple of years and investing it into large reasonably nonvolatile companies. What I am inquiring in is how best to select a few companies to follow with an aim of reaching an opinion of the value of the stock, after some research, and then investing in them?
Now, don't worry, I'm not asking for stock tips; I don't want to be told exactly what to do. What I want to know is how to narrow a good couple of hundred stocks down to a small handful in which I can research throughly and draw my own opinion of them.
Now in terms of the investing itself I feel I am relatively realistic. I am aware that compared to the rest of the market, I'm an idiot and that makes it quite likely that I will lose money (just hopefully not too much). But I want the experience itself to be educational and hopefully give me an edge on some of the competition.
So if you were me, what broad guidelines would you set yourself in creating one's first portfolio?
Are there any sectors which are good to avoid when starting out?
Is it worth going after 'hot' sectors which are getting allot of traction in the FT (eg Bioteck)?
Is it worth centring the portfolio around one sector, as to obtain a really strong understanding, or to have a more diverse portfolio which offers a broader understanding of the market and decreases risk?
And after narrowing to a couple of sectors of interest, how do you best select a small number of stocks from this sector?
Any advice would be most appreciated.
Why not try your skills out first with a paper portfolio?
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