5 Stock-Picking Tips From the Bible

I am intrigued by super-investors such as Warren Buffet and Peter Lynch. These individuals have enjoyed ginormous investment rates of return over years. I have wondered if their investment principles have Biblical parallels.

Please understand that I am not making any spiritual assessments regarding these gentlemen. While I have studied their investment methods, I have never met them nor had dealings with them. What I am asserting is that very often long-term success strategies very often can be tied to biblical principles even if the practitioners are unaware of or deny such comparisons.

Bible wisdom very often has very practical and tangible benefits in addition to the invaluable, incalculable spiritual blessings that we normally associate with scriptural truths.

So, having said that, here is my list of Biblical Guidelines for successful stock-picking:

Invest in what you know

“Desire without knowledge is not good, and to be overhasty is to sin and miss the mark.” Proverbs 19:2 (AMP.)

Don’t fall prey to some “hot tip.” Your experience along with some research can lead you to investment opportunities. “Invest in what you know” was a phrase that Peter Lynch made famous. Mr. Buffet has passed on opportunities that he did not understand.

If you stay half-alert, you can pick the spectacular performers right from your place of business or out of the neighborhood shopping mall, and long before Wall Street discovers them.” Peter Lynch.

Invest in quality companies

“But others fell on good ground and yielded a crop: some a hundredfold, some sixty, some thirty.” Matthew 13:8 (NKJ)

“You will know them by their fruits. Do men gather grapes from thornbushes or figs from thistles?” Matthew 7:16 (NKJ)

Superior, well-managed companies tend to do well year after year. These are the ideal “ground” to plant your seed (i.e. money). Such companies typically do not resort to dishonesty or ethical gray areas. The results of such efforts (i.e. profits) are evident.  As in farming, good ground can produce abundant fruit season after season.

“If a business does well, the stock eventually follows.” Warren Buffet.

Examine a Company’s Management

“ The plans of the diligent lead to profit as surely as haste leads to poverty.” Proverbs 21:5 (NIV)

The value of good management can not be overestimated. Fashions may change with the seasons but a savvy management team can interpret tumultuous times as opportunities to be seized. The Bible recognizes that good character traits such as honesty, diligence, and hard work are better indicators of business success – or any other kind of success – than, say, the Dow Jones Industrial Average, the business regulatory environment, or similar other temporal environmental factors.

“You only have to do a very few things right in your life as long as you don’t do too many things wrong.” Warren Buffet.

Invest for the Long Term

“Dishonest money dwindles away, but he who gathers money little by little makes it grow.” Proverbs 13:11 (NIV)

Oftentimes, investors may get discouraged or stressed during times of underwhelming market performance. During such times, the superstar investors typically remain calmly confident in their investment strategies. They know that quality portfolios will endure till more prosperous times.

“Our favorite holding period is forever.” Warren Buffet

“Just because the price goes up doesn’t mean you’re right. Just because it goes

down doesn’t mean you’re wrong. Stock prices often move in opposite directions from the fundamentals but long term the direction and sustainability of profits will prevail.” Peter Lynch

Be Patient

“The plans of the diligent lead surely to advantage, But everyone who is hasty comes surely to poverty.” Proverbs 21:5 (NASB)

Warren Buffet on investing: “There are no called strikes.” Mr. Buffet occasionally is criticized for not buying anything during long stretches of time. However, he knows that the rewards of buying that one great company outweigh those of buying a few mediocre ones.

Have I missed anything? What Biblical principles do you know of that will assist in evaluating an investment opportunity?

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Tagged as: Bible, Bible Study, Investing, Personal Finance, Stock-Picking