How to Sharpen Your Stock Investment Skills
3 of 11 in Series: The Essentials of Investing in Stocks and Bonds
Investors who analyze a company can better judge the value of the stock and profit from buying and selling it. Your greatest asset in stock investing is knowledge (and a little common sense). To succeed in the world of stock investing, keep in mind these key factors:
Analyze yourself. What do you want to accomplish with your stock investing? What are your investment goals?
Know where to get information. The decisions you make about your money and what stocks to invest in require quality information.
Understand why you want to invest in stocks. Are you seeking appreciation (capital gains) or income (dividends)?
Do some research. Look at the company whose stock you’re considering to see whether it’s a profitable company worthy of your investment dollars.
Consider the industry before you invest. You’ll frequently see stock prices of mediocre companies in hot industries rise higher and faster than solid companies in floundering industries. Therefore, choosing the industry is very important.
Understand how the world affects your stock. Stocks succeed or fail in large part due to the environment in which they operate. Economics and politics make up that world, so you should know something about them.
Identify megatrends. Social and cultural shifts — among other large, influential changes — can make a big difference in your investing decisions.