Tips on Stock Picking
Predicting the success of a company before investing can be a daunting task if not almost impossible. Stock investing has always been an aspect that has been made far more complicated than it actually is.
Predicting the success of a company before investing can be a daunting task if not almost impossible. Stock investing has always been an aspect that has been made far more complicated than it actually is.
One should also take note of the fact that the prospects of investing in stocks might be thrilling, they shouldn’t forget that just like every other business venture, you get to experience ups and downs.
Before discussing on some of the tips and methodologies in stock picking, it’s a good medium to actually address some misconceptions many people may have about stock picking. Most new brokers and investors believe that there is some incorrigible winning strategy to stock picking that always works and guarantees success.
If you’re reading this article in hopes of unlocking the secret key to successful stock picking, I’m sorry, we don’t have that! There is no foolproof system when picking stocks!
That being said, let’s look at some of the tips on stock picking.
1. Company’s Competitive Advantage: It is only natural that when looking for the right stocks to invest in, you try to get all the facts and data right. Looking at the numbers, such as the profits and earnings of a company can blind you from seeing the things you actually need to look out for.
Things like the Company’s advantage over its competition in the market, the company’s reputation, and even the quality of staff the company has to offer. All these and more add to the quality of productivity of the company and they can help turn a company’s fortune for good in the long run. This can be a very good place to start. Get all the data right and use it to choose the right investment plan for you.
2. Company’s Leadership: Watch out for the kind of people who makes the company’s decisions. Compare and contrast the decisions the company have taken and how it has affected the price of its stocks in recent times. How good are the people making the company’s decisions and how well enough are they able to tap into the available opportunities existing in the market? Opportunities such as dwindling prices of commodities and the demand and supply ratio waiting to be exploited in the market.
3. Industry Type: It is of good practice to find out the type of industry the company you intend to invest in is about. Use charts and other comparative market analysis to figure out how important that industry would be in future. Determining the potential available market can help you choose the right stocks that might be successful in future.