Applying the first M, i.e., how to pick stocks method requires clarification of some misconceptions. Few investors realize that there’s not a single 100% fool-proof stock-picking strategy that works in all environments and at all times. If there’s one, some mathematicians or engineers would figured it out and cornered the market!
Hence, how to pick stock should be treated more of a art than a science due to several factors
a) a company’s stock price is reflected by a multitude of data or ratios or results rendering a straight formula irrelevant
b) company information cannot be easily captured or measured. Especially the intangibles such as quality of staff, reputation and ever changing competition renders stock price highly susceptible and rather subjective for interpretation
c) the emotions of the stock participants remains unpredictable, quick changing valuation especially when fear and doubts persistently appears makes the stock market volatile and highly irregular.
d) The usage of different pricing models also provides stock market movements according to whichever believers want to believe.
The bottom line is there’s no one single stock strategy. Hence it is imperative the new investor must find a strategy that fits his or her knowledge, temperament, time frame and time put to test and ability to take risk.
Here, let’s provide the many different methods of stock picking, Take a pick of the following excerpt from www.investopaedia.com
|1) Stock-Picking Strategies: Introduction|
|2) Stock-Picking Strategies: Fundamental Analysis|
|3) Stock-Picking Strategies: Qualitative Analysis|
|4) Stock-Picking Strategies: Value Investing|
|5) Stock-Picking Strategies: Growth Investing|
|6) Stock-Picking Strategies: GARP Investing|
|7) Stock-Picking Strategies: Income Investing|
|8) Stock-Picking Strategies: CAN SLIM|
|9) Stock-Picking Strategies: Dogs of the Dow|
|10) Stock-Picking Strategies: Technical Analysis|
|11) Stock-Picking Strategies: ConclusionTake this opportunity to do basic research, pick the right methods for you but start trading!Happy Kaizen Trading!John Lee|