How do you pick stocks?
- Thread starter Matt
- Start date
Well, I think this may be a very on point article in NY Times over the weekend. Active Investment certainly creates drag on your investments vs. Index funds. I do have to say, sometimes it is just fun to invest into individual stocks, as long as that is a small part of your portfolio. I do recognize a lot of people disagree.
Here is the article:
Who Routinely Trounces the Stock Market? Try 2 Out of 2,862 Funds
Best,
PedroNY
Here is the article:
Who Routinely Trounces the Stock Market? Try 2 Out of 2,862 Funds
Best,
PedroNY
I do read a few articles on the stocks that I am interested in on SeekingAlpha, Motley fool to gain some perspective and understanding of the businesses and valuation. Motley fool periodically puts out youtube videos on some of the interesting companies and talks about different aspects of those businesses. I mostly tend to target Blue Chip Growth companies like VISA, MA, SBUX, GOOG, FB, AAPL, GILD, Z, BAC, AMZN, BA, QCOM and a few more. I believe that these companies have strong role to play for a long time in the future and DCA into them whenever I can. The idea is to build positions into these companies over time with the intention of never having to sell, like owning a real piece of successful businesses.
I am young and relatively new to investing and have picked up on a lot of useful tips in the last year such as ..
- "It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price." (Warren Buffett)
- Forever holding period, so choose companies that you think would last that long. History could be your friend here.
- Realize the potential of compounding. Better to hold a stock that could return 8% a year over 30 years than a crazy stock that could go up 100% one year and lose 100% the next (the net is negative).
- There will always be volatility in the stock market, but in the long run companies keep growing their earnings through different economic cycles.
- Buy stocks of any company in portions (Say you would like to invest 4k in a company, invest 1k at a time over few weeks while understanding the company more. That way even if you don't get the price right the first time you will be happy to add more at cheaper prices).
- Dont own a very large number of companies that you can't keep track off during earnings and such. I like following companies that I own and don't pay much attention to portfolio ups and downs.
and there are many more such things that I am trying to pick up. I also try to read some research reports that my brokerage firm provides, but pay less attention to them than I should.
penncomm
Level 2 Member
I have been using Gorilla Trades service for identifying potential stocks to invest in. It's a paid service, but it's paid off pretty well. More than anything, it has been an educational tool for me to learn about stocks and strategies for entry and exit points. It IS a lot of work to do it right. Not sure if I will continue with it or not...