How to pick stocks
From ArticleWorld
Contents |
Read
If you are a novice to the stock market but are interested in pursuing a goal to invest in it, the first and best thing you can do, to get you started is to read. It is important that you read as much as you can about finance.
To get started, read about the stock market itself, accounting, finance, financial statements, and even publicly owned companies. You won't need to spend money, if you don't want to, the internet offers plenty of free websites entirely dedicated to the subject of finance in all its many forms. For example, there is finance.yahoo.com, money.cnn.com and thestreet.com. In addition, to these websites there are thousands more that will aid you in understanding more about the stock market.
Next, it is important that you read magazines such as, the Wall Street Journal, Fortune, Smart Money and the Business section of the NY Times or your local newspaper can be a asset for learning about stocks. The simple fact is that the more you read, the more you will know about the stock market, and the better off you will be.
Search
When looking for companies to invest in begin with industries you are familiar with. It does not matter what your profession is: plumber, a car mechanic, teacher or even a student you know of some publicly traded companies if you think about it carefully.
Next, consider the kind of products you appreciate and like or contemplate companies that have given services that you thought were good or you admired. After you do that, look up the business or the headquarters of the business that makes the product you like. You can look up the company by going to finance.yahoo.com or at sec.gov
Money
The next step, is to decide the amount of money you wish to invest in the company. If necessary, think about how much money you are willing to lose, and ask yourself if you are still willing to invest that amount. If so, put in an order for the total number of shares you want, but only after you have followed the stock for a few weeks to see how it works.
Learn
Your next step, learn to identify stocks by following this criteria: is there a possibility that the stock will have a imminent price appreciation. Next, learn about the CANSLIM approach to investing, which shows you how to identify and pick stock for future price appreciation, by William O'Neil of the Investor's Business Daily. Finally, be prepared to learn when to buy stocks and when to not to put new money toward your investments.
Do's
There are some things you absolutely need to know. First, be wary of buying the "hottest stock" if it is too good to be true then it usually is. Second, set up your own criteria, and only buy stocks that meets it. Third, always do your homework. Fourth, a must read is "One Up on Wall Street" by Peter Lynch. Lastly, think seriously before you buy a stock, it should not be an impulsive decision. Ask yourself, if the stock I just purchased fell 15% will I think I made a bad investment? Your answer will tell you whether or not to precede.
Don't
Buying stocks should not be an impulsive decision. Do not put in overnight orders, stocks tend to rise and open higher at that time, and you will end up spending more money than you want. Lastly, do not sell your stock just because the price falls- wait and don't panic. If the stock continues to fall then make your decision. The reason people don't come out on top in the stock market is because of panic selling.