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Know What to Invest and What Not
“As an investor, you have to be really patient,” says Howard Atkinson, president of BetaPro Management, a company specializing in Exchange Traded Funds. “And right now, it’s hard to be that patient,” he admits. He said that some years, fund managers who prefer stock picking have periods of poor performance, but other times they yield quite well. Many advisory firms chase after “what works,” which makes stock selection a tricky nut to crack, considering this strategy only works if the right stocks are chosen. Even so, a diverse portfolio can yield the best returns, so many Americans are reconsidering this more daring approach again.
Sometimes stock picking can really work out great. For instance, financial advisory professionals who advised their clients to put money into MacDonald’s fast food chain in 1992 are now enjoying 25% returns each year. Similarly, insightful investors who sunk ,000 into Microsoft’s stocks back in 1986 would have earned 35,000% back on their investment over an 18-year period! So by 2004, that initial investment would have become a nice .5 million, which would be an ideal retirement cushion!
There are many different types of stock picking strategies. Some of the most common include Fundamental Analysis, Qualitative Analysis, Value Investing, Growth Investing, GARP Investing, Income Investing, CAN SLIM, Dogs of the Dow and Technical Analysis. While there is limited space to delve deeply into these complex strategies here, more information can be found at Investopedia (www.investopedia.com/university/stockpicking/stockpicking1.asp). Even when consumers learn financial investment techniques, there is no guarantee, however. According to Investopedia: “The bottom line is that there is no one way to pick stocks. Better to think of every stock strategy as nothing more than an application of a theory; a ‘best guess’ of how to invest.”
For beginners, the idea of stock picking can be overwhelming. Before offering up hard-earned capital, it would behoove new investors to read a few books to understand how the system works. According to Amazon, some of the top-rated, best-selling stocks and investment strategy books include, If It Doesn’t Go Up, Don’t Buy It (by Al Thomas), Buffett: The Making of an American Capitalist (by Roger Lowenstein) and Get Your Assets in Gear! Smart Money Strategies (by Jan Dahlin Geiger). After reading up, some Americans wish to try stock meandering themselves, while others ask a financial advisor for assistance.
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