How to Choose the Right Stocks

August 24th, 2008

Everyone agrees that the market is continuing to decline and some of the analysts are even considering a much longer recession period in the U.S. Does this mean that you have to close all your stock positions and divert your investments into a low yield government bonds shelter?

Over the past decade, the market has seen both bullish runs and bearish ones; dot-com irrational exuberance; corporate corruption and the resulting legislation; 9/11 and the following consequences; and now a global sub-prime credit crisis. Despite all of these, the market has been more up than down.

Since it is impossible to predict in advance when a bearish or bullish period starts or ends, the conclusion is that in the long run you have to stay in the stock market in order to benefit from its overall increment throughout the years. This is not meant to suggest that you should never sell stocks; it is just that you should continuously learn stock investing strategies, improve your investing skills, and invest with your brain, not your emotions.

You can choose to hold an Index Fund or an Exchange Traded Fund that will match the market return; but, in case you want to beat the market return and gain larger profits, there are generally two ways to consider. The first is to buy stocks and hold them for a longer period of time; this is the value investing way and it is used by great investors such as Warren Buffet, Bill Miller, and a few others. This strategy includes analyzing the fundamentals of the company, such as its financial condition, its management and other essential issues, in order to estimate the company’s intrinsic value and understand if its stock is currently undervalued, which means the price is right for buying.

The second way is to try and gain from the short term volatility of a given stock price by using Technical Analysis indicators. Technical Analysis is based on the assumption that all the information about a stock is reflected in its price; thus, by analyzing the movements of the price or the changes in the trading volume of the stock, one can predict the future short term behavior of the stock price. As in the previous strategy, this too requires self-education and practice.

No matter which path you choose, you’ll need to find the right stocks for your portfolio and know when to buy and when to sell them. The Yalicoo arena is a great place to provide these needs. Yalicoo has thousands of registered traders holding many winnings stocks. Yalicoo’s leaders have proved in the past that they can definitely beat the market at any given time by picking the right stocks and holding them for the right period of time.

In any virtual stock trading competition that you join, you will immediately see the five top leaders in the competition, including all their transactions - live. Besides the cash prizes you can win in these competitions, copying Yalicoo leaders’ stocks into your real money portfolio can increase your actual profits by hundreds and even thousands of dollars. This will dramatically simplify the process and time required to choose the right stocks for your portfolio. In any case, remember one thing: monitoring the leaders’ moves should be regular and persistent in order to achieve consistent profits.

Last 5 posts by Yinon Arieli

• How cheap are stocks now? - October 26th, 2008
• New Wall Street Terminology - October 18th, 2008
• What does Warren say? - October 15th, 2008
• Should you buy now or wait for a better time? - October 2nd, 2008
• Understanding Fundamental and Technical Analysis - September 27th, 2008

Tags: stocks

Entry Filed under: Stock Trading Investing Basics