Hey there, we’re glad that you’re back! We’re off to a good start with this series. In part two of success mentality for investing we spoke about how panic is the worst thing that can happen to your state of mind, we’re now going to address future changes and what to look for before buying stocks.
The Philosophy Of Buying And Selling Stocks
It may seem that the classic investment philosophy of “buy low, sell high” is basically the golden standard when it comes to making a profit, but it’s hardly ever that simple. Just because a stock is low doesn’t mean that you should jump at it.
Likewise, if there are tremendously expensive stocks to purchase, then don’t be afraid of considering them when thinking about property to add to your investment portfolio.
It may not make sense at first, but there is very good judgment involved. The most successful investors always look for the looming factors that can suddenly adjust a stock value. In order words, they pay attention to near-term catalysts when considering selling or buying stocks.
It’s true that paying attention to advice telling you to invest for the longest term is very smart. However, there’s wisdom in looking at what’s coming up around the corner and knowing what to expect that could very well significantly adjust the value of the stock in question.
For instance, the stocks for automotive companies have been cheap this year. Especially GM, which is some of the cheapest you can look into. Buying stocks that are the cheapest may seem like a good idea. Not always so! Gas prices have gone up considerably, haven’t they? Factor in the fact that GM has largely focused on producing heavy inefficient SUVs and Trucks to push sales, then you can see how the two collide to produce devastating results. The price of gas is the “near-term catalyst” that you’re looking for.
The basic idea is to look at stock broadly and to know what affects it directly. Evaluating numbers is a great exercise in abstraction, but sometimes the best stock investment strategies involve simply considering obvious aspects of companies and the variables of their respective industries.
Having said all this, we’ve run out of time. Be certain to check back often, as we’re not done yet. Thanks for reading, and come back soon!
Sean Rasmussen
The Bullhunters Guide
Universal Wealth Creation © 2004 – 2010
{ 2 comments… read them below or add one }
Hi Sean,
I guess that crunching the numbers can only take you so far. Then you need to rely on good judgment and common sense to help you choose the best stocks.
There are so many factors to consider but at some point you have to stop analysing and pick the stocks.
I was taught to never buy certain stocks because of their instabilty and I always took heed of that. My mentor is a world class trader and self made millionaire so I never had to question what he taught me.
Many other things he taught me about the stock market were just common sense, like you say about the best stock investment strategies, it is simply common sense and easy to learn.