How to recognize a profitable stock.
In today’s world, it is difficult to not learn the trade of the stock markets. Some people might rather stick with Financial institutions and their mutual funds simply because they don’t believe they have all the skills needed to survive on the stock market. I was once like that, but I have decided to learn the trade. This change was not sudden, I have suspected some very unfair numerical movement occurring with my former mutual fund provider. It seems that no matter how large a climb the market have, my monies hardly grow, yet when the market falls, my monies immediately fall. Since I don’t know what their portfolio is like, I was left with one choice, to stop my affiliation with them. So, I took my financial strategies back into my own hands and started learning the trade of the stock world.
My first problem was, how to pick a profitable stock? This is one of the major turn offs for new investors before buying any stocks, since most non-market investors would have absolutely no clue on what each stock does.
My point of advice is, if you don’t know a lot yet, buy stocks that are related to you or your trade.
For me, I am a software Developer by trade, so I have many stocks to choose from. My first choice was Hewlett Packard.
Then the number started coming in, I purchased the stock around 40 dollars, excluding inflation or deflation, this is a hypothetical estimation where the stock price would not change from the day I purchased it to the day I sell it, just the dividend alone would yield close to 0.6% per year. that’s above the same growth rate my mutual fund was growing. Now if we remove the hypothetical limitation and I still hold the stock today, it is now worth about 50 dollars. Considering I brought it back around April this year, the growth is amazing!
So, I immediately devoted my life savings into this field, and got some really chilly spikes within the last few days. If you read my daily posts in the stock’s world, you’d noticed that the last few days have several reports that was almost stating we are already in a recession. However, this is a chance anyone must face. Even if you put your life savings in your bank account, there is a chance your bank would go bankrupt in the next recession.
Remark : To pick a profitable stock, pick stocks that are in your major field. Since for one to be as closely to a stock as possible, one must be in the same sector and field as the company that is issuing the stock. This is also because no one would buy stocks on a steak farm if he or she doesn’t eat beef.