This post is from staff writer Sarah Gilbert.

I’ve been doing what I call “investment banking” for a friend’s company (I say it that way because the work I do is almost definitely not what you probably think of when you hear the term), and I get this question almost every day:

“So, I guess you know a lot about investing!”

Well, I know more than perhaps most people about investing. But, again, it’s not what you think; I’m not doing any research into public companies, and I’m never, ever picking stocks professionally. Most of the work I do is with deals that have closed long before or deals that are only imaginary.

People ask me, often, “So, you’re an investment banker? What should I invest in?” My response isn’t what they’re expecting, even though I think it’s the best advice:

“Invest in companies you like.”

I’m going to make the usual disclaimers here: most people should be investing in stock and bond funds, especially index funds, for their retirement accounts. Most investment professionals recommend that only about 5 percent to 10 percent of larger retirement portfolios should be invested in individual stocks, and one should never, ever do what I’ve done quite a few times (as a young, silly person): invest all or most of one’s retirement account in only one stock — e specially not your employer’s stock!

But, inevitably, people want to at least know what they might do should the opportunity to pick some stocks present itself — and there are lots of great ways to invest in single stocks without unduly weighing down your investment portfolio, like Sharebuilder. (Basically, you pick a dollar amount to invest each month — say, $50 — and it gets put into the stock of your choice, on the same day each month, in fractional quantities based on the stock price that day.)

So I have a list of things I look for in a stock. And the first one is that I like the company and most importantly the CEO.

“The CEO is the main character of a stock’s story.”

It’s not a coincidence, I don’t think, that I’m both a writer of stories and a lover of investment banking. I think of companies in much the same way I think of literature: driven, essentially, by the main character of the story. CEOs are interesting; of the companies whose CEOs I’ve either met or gotten to know by obsessively studying their interviews and public statements, I never once remember seeing a company whose long-term performance differed greatly from the personality of the CEO. That’s not extremely clear so I’ll give you a few examples.

1. Hospital management company number one. When I was a young investment banker, I had two hospital management companies whose deals occupied a lot of my time. In both cases I got to know the management teams fairly well. In both cases, I watched their performance for several years. Number one was run by a very ego-driven doctor whose tan was nearly orange and who often made startling pronouncements in bank meetings — predictions not supported by his financial team, say, or exaggerations of performance when we had the real numbers in our handouts. His employees seemed a little frightened of him. Hospital company number one bought too many urban hospitals outside of its management scope, got too deeply in debt and ended up having to liquidate a few hospitals, losing money.

2. Hospital management company number two. The second company’s management team was boring, boring, boring. The CEO was also a doctor, but he wore unremarkable suits and worked too much to spend any time tanning. He was careful and kind, and his management team followed him loyally. His VP of finance would call me in the middle of the night sweating over a small detail in the financial sheets. He did not, that I know of, drive a flashy car. This company made smart investments, slowly, and was ultimately purchased by a larger company for a good price.

No matter what sort of company it is, a CEO will set the tone. Many organizations are held together entirely by the force of the management team’s personality, and the CEO usually hires the rest of the team. If you think the CEO is stupid, ego-driven, mistake-prone, too likely to take risks, cripplingly risk-averse, unethical, or tending to make decisions on a whim; well, you might (as with, say, Enron) make money in the short term, but in the long term the company’s story will hew more closely to the CEO’s story than to any of the bit characters.

“Invest in sustainable market trends.”

Quick distinction: there is a difference between trends and fads. One is the way the sentiment of a large group or force is moving. For instance, our country is trending toward greater acceptance of gay marriage. The other is something that could be extremely popular today and a complete dud tomorrow. Silly Bandz were a fad. Invest in trends and not in fads.

One of the client companies I’ve been following is an end-of-life transition company. In other words, they own funeral homes and cemeteries. There is a sustainable market trend for you; death rates are increasing — any reversal of such would be slow and obvious — and we have not seen a major cultural shift away from funerals or burials. It’s sustainable, because we keep growing people, and they’ll have to die eventually.

It’s also relatively “sustainable” in another meaning of the word; it is not a company whose product uses very finite resources (or whose byproduct damages finite resources) that might disappear, increase greatly in price, or become heavily restricted in the near future. For instance, many human rights watchers have begun to voice concerns about some of the metals used in the components of most mobile phones, digital cameras, tablets and laptop computers. They are mined under dangerous conditions, they can provide funds for combatants in conflicts, and their disposal is tricky.

But you could see “sustainability” in a number of ways; maybe you wish to invest in companies engineering crops for drought tolerance and higher yield, or maybe you believe that such companies are forsaking economically sustainable practices (seed saving and soil preservation, for example) in order to obtain a higher price for their goods (the seeds). It’s important to remember that you still have to make your own judgment. A claim of sustainability is just that, a claim, and you have to determine how well you believe in it (return to the first point, likability and trustworthiness).

“Invest in companies whose future prospects are rosy.”

You don’t want the companies whose projections show 20 percent growth for the next five years. Those numbers may be impressive and awesome, but they’re expensive. Investment advisers say that a company’s future growth is “priced in”; in other words, you’ll be paying for the stock as if the company had already achieved the analyst-consensus growth rate. But that’s just a guess based on current market conditions and current information. You’re paying for a guess.

You’re better off not with companies whose futures are so bright (you gotta wear shades), but with companies whose future are just a little blush of pink. You want a company whose growth prospects are possible. Take McDonald’s, if you believe that fast-and-cheap-and-corn-fed model has a long future — I don’t — but we can all agree the company is pretty widely distributed. Even its international growth has been a part of pop culture for decades. Remember the “Royale with Cheese”? Anyway, it’s a crap shoot; there might be a big future for fast food, but then again, there might not. Better off with something small enough to leave room for growth but not so small as to be unproven. Rosy.

I like companies who are taking advantage of growing market trends in sustainable products, like Seventh Generation. (The company isn’t public, but if it was, I’d be a buyer!) Maybe you believe in the future of sub sandwiches. Maybe you believe in the future of Med-alert devices. Whatever it is, take a look at the future, and make sure you can see it — glowing but not blinding.

What stocks do you think make sense in these qualifications: likeability, following a sustainable market trend, and with a rosy future? Is there anything else you really focus on when picking a stock?

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