Stock Picking Strategies
You see people hand out stock picks all of the time on television, articles, and pay services. People crave ideas that will make them money so there is a huge incentive for people to provide them.
I know, because I have been on the internet writing about investing now since before 2000. I used to manage a hedge fund and now run a private high dollar stock trading mastermind group. I also blog about the market.
So I'm asked for stock picks all of the time. But I want to tell you that simply getting into a stock picking service or using someone else's ideas will not help you make money in the long-run unless you know what you are doing.
Real Stock Picking Strategies
No matter how good someone's picks are you will run into trouble if you do not integrate them into some strategy that you are using that controls the risk in your account. You can't just buy a few stocks and get rich.
You need to diversify by owning multiple stocks. It's best to have at least ten. Less than that and your positions are so big that if one of them goes wrong it will mess your whole account up.
A lot of people also use stop loss orders so that if a position goes against them they will be automatically sold out of it so it can't hurt them anymore.
Without a strategy for what you are going to do after you buy a stock than even if you know the best stocks to buy it won't do you any good.
A lot of people fall into a trap of not thinking about this. Then they take a hit and try to do something risky like buying a penny stock on the otc bulletin board that they know nothing about. All they did was hear a story and jump in.
So you need to think a bit about what you are doing and have a good strategy on how to buy stocks before you use someone's else's stock picks - no matter how good they may be.
And you need to understand their methodology when they make their picks. Way too often I have seen people simply buy into a story without any idea of what price the stock they are buying is at.
Let me explain to you what I mean. When you buy a stock your are investing in the shares of a company. You are buying into a company at the value those shares are trading at.
If those shares are priced high than you are paying a big valuation for that company and it becomes hard to make money. The higher the valuation the more you need to hope that simply will be willing to pay any price without much thinking.
If you pay for a stock that is at a low valuation - meaning you are paying a low price for what the stock is actually worth - and you can measure that by looking at things like P/E ratios, expected earnings growth, cash on hand and several other key metrics - than you can invest in the confidence that you are buying something at a cheap value and therefore are likely to make money.
So it's not the story that is important, but the price you are paying to invest in the shares of a company that is. Unfortunately this is rarely talked about when a stock is recommended on a TV or in a magazine, and the typical investor is too lazy to want to think about it.
But you can develop a method that does all of this quickly for you. I have used what I call the Two Fold Formula to pick out stocks for over a decade now. It uses a specific valuation metric with price momentum chart patterns to find the best stocks.
You can get it for free by taking a free membership level to this website. Once you do I'll email you my Two Fold Formula PDF report. Just go below to start.