How do I choose a stock to buy?

Start where Peter Lynch told people to start decades ago: with businesses you actually understand. The coffee chain you visit, the software your office runs on, the retailer whose parking lot is always full. Understanding what a company sells and why customers keep coming back is most of the work, and it is work you have already done.

Then check three things on the company page or in its latest report. Is it profitable, and are profits growing? Is its debt manageable relative to what it earns? And what are you paying for those earnings, meaning its P/E ratio compared with similar companies? None of these are exotic; they are the same questions you would ask before buying a corner shop.

Next, write one sentence on why this company will earn more in five years than it does today. If you cannot, you do not have a reason to own it, only a feeling. Feelings are what the market charges the most for.

Finally, size it. However confident you are, a single stock should be a small slice of your total, because even great companies have ugly years. The fund underneath does the heavy lifting; the stock is the part you enjoy.