Stock Picking 101
“The time to obsess about macro factors has probably passed,” reports Citigroup’s chief global equity strategist Robert Buckland. “If a stock has decent prospects through the cycle, then buy it. Stop worrying about where we are in the cycle. It’s too late for that.” According to Buckland, stock picking is back in full swing. Historically, independent financial advisors say, cherry picking the best types of stocks has yielded the best returns. During particularly volatile markets, investors tend to go into survival mode and shift to the friendly giants that yield lower returns and promise a safe, steady return. Yet finance experts from Canada to Australia to the United States report that consumer confidence is beginning to shift.
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.”
Stock picking can be done by individuals or by professionals. Top financial advisors work to assist clients in selecting a winning stock portfolio. While these individuals are undoubtedly more experienced in watching economic market fluctuations, they are still human and ultimately fallible. One should not simply entrust an enormous sum of money with a financial advisor, without looking over the periodic statements and watching the DOW/NASDAQ activity. All investing is a gamble, so expectations should be clear when getting started. Perhaps the best advice is still “don’t put all of your eggs in one basket!”
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