Everyone wants to make money in the stock market, yet sometimes it seems only talk show gurus and financial firms do. Make your own smart market decisions.
A lot of technical data is available for researching stocks, and they are important. Non-technical information can also provide valuable information. Check out recent company news and announcements. Analyst ratings and earnings estimates let you know where the professionals see the company going in the next year or two. Insider trading can provide eye-opening data. If a lot of insiders in the past few months either bought or sold a lot of stock it could be indicative of where top managers think the company is headed. Stock ownership information provides insight into which large institutions, mutual funds and pension funds own the stock and have recently bought or sold the stock.
Stock Ratings and Stock Screeners
A number of financial websites offer stock ratings and screeners. Some of them are professionally computed; others are collections of reader input. Lipper rates mutual funds, Zacks grades stocks and Morningstar rates mutual funds and stocks. Compilations of reader ratings are offered by MSN Money and the Motley Fool. All of these sites also offer mutual fund or stock screeners. Professionals spend a lot of time evaluating stocks and funds on a series of criteria, including ratios and an in-depth analysis of financial statements. Some amateur investors do the same, but many have their own systems which can be analytical or emotional.
Many companies and individuals publish newsletters with stock and mutual fund recommendations. It is a good idea to review the suggestions of others. An investor may not be interested in a particular stock, but insight into particular industries, new technologies and market trends can be valuable.
Create a Personal Search Strategy
An investor should prioritize the criteria considered most important in their stock search. It might be size of company, performance over a period of time, cash flow, dividends, rate of growth. Stock screeners allow input for a variety of factors. Try different screeners and find one that provides you with the best information to meet your needs. Check out what others – professional and amateur investors – say about a stock. Other people’s input should be taken with, as the saying goes, a grain of salt.
You never know who is providing information and what their motives might be. A lot of financial institutions recommended stocks in the past because of business relationships. Amateurs may post information because they have a personal beef against a company, or because they want to promote the company. Evaluate all the information and, finally, make your own buy/sell decisions.