Your Questions About How To Pick Stocks

Michael asks…

How do you pick stocks over the long term?

Because sectors and the market keeps changing, Even though it is long term investing you still have to do your homework and research. Im 18 years old so i can take some risk throughout the long term, but dont want it to be that risky, I think i might want some growth and income stocks.
Would the technology sector be a good long term investment for a 18 year old, considering technology could go very far in the future?

John answers:

Yes i suggest you look at blue chip stocks. A blue chip stock is the stock of a well-established company having stable earnings and no extensive liabilities. Cisco is a technology blue chip

Lizzie asks…

For a new trader….what is the easiest way to pick stocks on a budget?

I have $1000 to start trading…as a beginner, how many different stocks is reasonable to focus on at one time?

John answers:

A few years ago the “talking heads” of the financial media were discussing this subject and one person gave details about how he would have a minimum of 11 stocks to be diversified. I don’t believe $1000 is enough to get enough shares of 11 “good” stocks to make it worthwhile. For beginners, I prefer a good well diversified mutual fund as a “core holding.” Once you have a good amount in that, you can branch out to stocks. There are several good funds you can open with $1,000, one (not a recommendation, just one of my favorites, do you own research) is Vanguard’s Star Fund.

Thomas asks…

How do you pick stocks in a market like this?

Everything on my watch list is at its 52 week high, they are all trending up with little to no down movement…

Is it a bad time to be a Bear? I keep expecting a correction to come…

John answers:

I pick stocks by whether they meet my personal criteria. I purchase dividend stocks only, as I am looking for stocks which can potentially provide me with supplemental income in the future. Thus what I look for includes the following:

1. I generally prefer to buy stocks in the $10-$35/share price range.
2. I will only buy quarterly dividend stocks paying at least $0.25 quarterly; preferably more
3. I will only buy monthly dividend stocks paying at least $0.09 monthly; preferably more.
4. I try to buy stocks which have a price/earnings ratio of around 20%
5. I pay attention to ex-dividend dates when buying stocks.You want to buy at least three or more days before the ex-dividend date, to be assured of getting the next dividend. This is not a huge priority for me, but it is a consideration.

If you are buying primarily growth stocks, I’d figure out which market sectors interest you and which companies have quality fundamentals. Basically, buy from good, solid companies which have been around for a while and look to continue that way. Best of success!

Carol asks…

how to pick stocks to gain returns in the future?

what all to be considered to get high returns in the future for definite?

John answers:

Definite? There is no definite in investing, there is always what’s called risk…… And it applies to every investment, no matter what people tell you. There are some investments with very very little risk and some with a lot… The expected return from each investment is in line with each amount of risk. Stocks are historically the greatest returning investment. Most important is to pick the right stocks and be in the right sector,,, you should check out they have some great articles to teach more about whats happening on wall street…

Good luck

Robert asks…

What is the best book to learn how to pick stocks?

John answers:

Anything by Benjamin Graham or snowball by Warren Buffett

Also Zulu Principle, which basically advises to narrow your field of focus to become an expert in 1 or 2 sectors

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