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The choosing of shares to include in a watch list or portfolio. Together with your timing, your choice of which share to buy is critical to your success as an investor. You begin with the universe of shares which are listed on the JSE and then eliminate them according to various criteria. For example, the first criteria should probably be the daily volume traded on the share - because if it is too thinly traded you will not be able to execute your stop-loss strategy. We suggest that you only consider shares which trade at least 3 times the value which you want to buy, on average every day, over the past month at least. Your second criteria could be the industry that the share is in, or its size, or its earnings track record. There are any number of criteria you could develop to assist you with your share selections, but basically you are looking for a company which has a solid management and a good track record of profitability. It does not have to be a blue chip, but the smaller it is generally the more risky it becomes. Ideally you should put interesting-looking shares onto a "watch list" and follow them for at least a month while you read everything you can find on them. It is also a good idea to visit the company and try to see one of the directors. The company's financials should be available from the SENS or the company's web site as a downloadable PDF file. Study these carefully. In the end, however, no matter how much homework you do the ultimate decision to buy is intuitive.

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