We have had a few articles on picking stocks now. We have talked about picking stock strategies for you and using the news in your favor. We shall expand upon those points here, in this article.
Having a critical eye when stock picking
Whenever reading an article or blog about some financial news, think. Do not just accept their analyses of situations as gospel. You need to compare and contrast what you know with the article. You should also get a wide range of perspectives on why certain things are happening. Through this combined effort, you should get a reasonable understanding of what is going on. The more experience you have, the better you should be able to grasp things.
Here is an example of what you could be doing though. Say that someone makes an argument that the prices of a commodity are rising because of the rise of the middle class. This then profits the producers. However, here, it appears that they are not thinking far ahead enough. Say the supply of said product is infinite. This greater demand will, in such a situation, have minimal effects on a company. The company will keep doing what it was doing beforehand.
Essentials in finding companies
Here, we finally get to the meat of the story. There are a few main criteria necessary when choosing a firm. Or, at least, they can guide you in the right direction.
First of all, get a hold of some ETFs. They can tell you about the performance of an industry. With them. It has the summative prices of a wind range of companies.
Try to use a screener. This can help filter out some of the companies you do not desire to work with. You can also sort them by various criteria, like the market cap.
Look online anywhere you can. Check plenty of blogs and articles. They are bound to have references to up-and-coming companies.
After you do all of this, you will have found some worthwhile companies. Compare and contrast their figures, and making a decision.