Smart stock investing requires sound methodical strategies. This article will discuss stock investing strategies and aim to tell you how they can be used to help you invest in stocks that will outperform the market and provide you a higher return than the market.
First you should understand that no system is guaranteed to succeed, otherwise everyone would be an investment millionaire. What you need to do is to apply several elements from various strategies along with some common sense and use your instincts and you will hopefully be well on your way to success.
Look at all aspects of the company
There are no golden formula that can be used to guarantee you the answer to the ‘will this company be a success’ question. What you need to do is analyse all of the data; margins, debt ratios, earnings growth, price earnings ration, dividend yields, dividend payout ratios, market share, balance sheet health, turnover, costs etc. When looking at this data do not make the mistake of looking at it in isolation. For all figures looked at try to make comparisons to historical data and also competitors in the same industry.
Look for what cannot be seen
You should always consider intangible factors alongside the numbers and ratios that are easily available and definitive. Try to find out about the culture of the company, the staff it has, does it have any patents on products that may potentially prove lucrative?
The key to smart stock investing is being able to find the relevant numerical and intangible data available about companies. This can and should be done through many varied sources such as the internet, newspapers, visiting the companies themselves, using their products or services, do you know a friend who works there that can help you find answers to some of your questions. Once you have found the information what makes a successful stock investor is being able to filter out the useful, relevant information that points to future income or growth potential.
In short there is no best approach. So called stock picking strategies are simply individual theories about picking stocks. Try to take the best elements from a few of these to devise a strategy that works for you.