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identify And Evaluate Emerging Competition As Well As Existing Competitors.

on which shares to buy depends on many factors such as:

i your need for capital growth rather than investment income,

ii the degree of risk you are prepared to take,

iii the time you can wait for the investment to show a return,

iv in what sectors of the economy you wish to invest (either because you have particular knowledge in one area, or because you are opposed to, or specifically wish to encourage, a certain sector or sectors).

All this presupposes that you have a good working knowledge of the economy generally (that you keep yourself up to date on what is happening in the world), and have understood all that we have said so far.

If this is not so, you will probably be better off with a unit trust or managed portfolio for the time being. There is plenty of time to learn more.

In discussing what shares to buy, we have assumed that you are going to deal with shares rather than other types of security or investment.

Choosing the Shares

There are over 8000 shares quoted on the Stock Exchange. A glance at the web pages of FT.COM will give you an idea of the size of the task.

However, some categorisation has already been done to assist you.

An obvious category for you may be a particular sector of the economy. If you have experience of the oil industry, or electronics, or publishing, or building, it makes sense to invest accordingly as you will understand the implications to that sector of what you read in the news.

After the sector, the next most important factor is size. Shares are already classified as alpha, beta, gamma and delta shares. It is unlikely that the small investor will invest in gamma and delta shares.

Alpha shares are among 'blue chip'shares. These are of companies, often household names, of large size, steady growth, with plenty of asset backing and a good dividend record.

Currently the alpha shares include:

Allied Lyons Coats Viyella

Amstrad Commercial Union

Argyll Group Consolidated Goldfields

ASDA MFI Cookson

Associated British Foods Courtaulds

Barclays Bank Dee Corporation

Bass Dixons Group

BAT English China Clays

Beecham Fisons

BET GEC

Blue Circle General Accident

BOC GKN

Boots Glaxo

BPB Industries Globe Investment

BPCC Granada

British Aerospace Grand Metropolitan

British Airways Hotels

British and GRE

Commonwealth Guinness

British Gas GUS 'A'

British Petroleum Hanson Trust

British Telecom Hawker Siddeley

Britoil Hillsdown Holdings

BTR ICI

Bunzl Jaguar

Burton Ladbroke

Cable and Wireless Land Securities

Cadbury Schweppes Legal and General

Lloyds Bank RTZ

Lonrho Saatchi

Marks and Spencer Sainsbury

MEPC Scottish and Newcastle

Midland Bank Sears

National Westminster Sedgwick

Bank Shell Transport

Next Smith and Nephew

Pearson Standard Chartered

P and 0 deferred Group

Pilkington Brothers STC

Plessey Storehouse

Prudential Sun Alliance

Racal Tarmac

Rank Organisation Tesco

Reckitt & Coleman Thorn EMI

Redland Trafalgar House

Reed International Trustee Savings Bank

Reuters Trusthouse Forte

RHM Unigate

RMC Unilever

Rolls-Royce United Biscuits

Rowntree Mackintosh Wellcome Foundation

Royal Bank of Scotland Whitbread 'A'

Royal Insuran


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