The School of Hard Stocks Stock Education section.
One way you can beat the market is by owning the best stocks. Another way is to avoid the biggest losers, play defense, and preserve capital by avoiding big losses. By avoiding chip stocks like Texas Instruments (TXN), we reduce risk in our portfolio and hold more dependable stocks.
One of the best ways to search for the best stocks is to keep an eye out for companies that beat the street. Keeping a lookout for companies like Coach (COH) in early 2000s that beat the street and breakout on the same day lead you to finding the very best stocks in the market.
It is often the smallest stocks that can lead to some of the best gains. Alliance Gaming (ALLY) was a great example of under-the-radar winner.
Stocks within an industry, or sector, usually move in tandem. In my opinion, the second biggest factor that determines the short-term movements of a stock is the sector or industry the stock is in. Featured stock Cognizant (CTSH).
In order for a company to grow profits rapidly for many years, it needs to have some kind of competitive advantage or a catalyst, like iPod was for Apple (AAPL).
Once the stock you research has passed the tests of consistency and certainty, look into the future and imagine how big the company will be years from now. Stocks highlighted eBay (EBAY) and Google (GOOGL).
Certainty is especially significant in tough market conditions. Stocks with certainty are the ones in sectors that don’t get pinched in recessions. United Health (UNH) is a good example of a good investment.
Consistency is like Bigfoot’s footprints in freshly fallen snow. Not only do they give you a clear picture, but a sense of where this thing might be headed. Featured stock Stryker (SYK).
If there is just one characteristic that separates the best stocks from the rest, it’s high profit growth. To find the no-brainers at the beginning of their huge runs, search for companies, like Dell (DELL), which growing profits rapidly.
Big stock winners are easy to recognize. You should find that the best stocks, such as Wal-Mart (WMT), are no-brainers.
Learn about The Rule of 72, which allows to calculate how long it will take to double your money, given a specified return. Stock Highlighted Chico’s (CHS).
