Stock Picking 101
According to Citigroup strategist Robert Buckland, the financial advisory business operates largely on trends. “We still meet too many fund managers who, two years ago, were diehard stock pickers and would never see a strategist. Now they are all over the latest moves in the Shanghai market or the ISM [Institute for Supply Management] index,” Buckland says. “The bear market has bullied them into becoming much more top down, and their view on the market/economy is often the reason why they are reluctant to get on board the rally in riskier or more cyclical stocks.” However, he says that more funds managers are now shifting back to stock picking, which can lead to higher returns.
Investors who are interested in stock picking have many different places to learn financial secrets, tips and trends. According to Forbes Magazine, some of these personal financial advisor “hot spots” include ClearStation (www.clearstation.etrade.com), MSN Money (www.moneycentral.com/investor), Marketocracy (www.marketocracy.com), Reuters Investor (www.reuters.com/investing), MarketHistory (www.markethistory.com), Morningstar (www.morningstar.com), Sector Updates (www.sectorupdates.com), Stock Fetcher (www.stockfetcher.com), Stock Selector (www.stockselector.com), ValuEngine (www.valuengine.com) and Wall Street Transcript (www.twst.com). Over time, the consumers who watch market activity will begin to develop a fundamental understanding of the markets.
There are many different types of stock picking strategies. Some of the most common include Fundamental Analysis, Qualitative Analysis, Value Investing, Growth Investing, GARP Investing, Income Investing, CAN SLIM, Dogs of the Dow and Technical Analysis. While there is limited space to delve deeply into these complex strategies here, more information can be found at Investopedia (www.investopedia.com/university/stockpicking/stockpicking1.asp). Even when consumers learn financial investment techniques, there is no guarantee, however. According to Investopedia: “The bottom line is that there is no one way to pick stocks. Better to think of every stock strategy as nothing more than an application of a theory; a ‘best guess’ of how to invest.”
In these troubled times, some people are wary about stock picking and reasonably so. A number of people who tried to “get in on credit card investing” wound up devastated when the financial market unexpectedly collapsed. The same holds true for millions of citizens who were told that real estate was a sure bet. Perhaps the most important lesson from this whole thing is that there is no such thing as a “sure bet.” All stock products are merely a gamble; an educated guess. Sometimes these gambles can bring in handsome dividends, while other times they yield unrecoverable losses. Even so, there is no better system to raise residual money. Bonds and bank account interest accrue at such menial rates, it’s hardly worth one’s time; yet a carefully considered portfolio aimed at long-term rewards is the best system we’ve got.
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