Stock Picking is More an Art than Science

Stock Picking is More an Art than Science

Very few first-time investors make any appreciable money in the stock market. Many first-time investors fail in the first few stages of investment which made many to quickly scare away. The reason behind this is because stock picking is more of an art than science.

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Many people believed that there’s a secret formula to picking successful stocks. But this is simply not the case. There are just too many variables in world economies and individual companies. And the most successful investors know that their success lies in knowing and developing the art of stock picking.

How to Analyse Stock Picks

It is very important that you analyse stock picks before investing and there are several methods or strategies to do that. None of these methods are intrinsically right or wrong. It will of course depend on your personal preferences. Among the most common methods of stock analysis are:

  1. Fundamental Analysis

This strategy is based in the fundamental analysis looks. Based on the looks, one will try to determine the fundamentals of any company to discover the intrinsic value of a stock. The investors will look at the cash flow, projected future profits and growth rate. All these information will be compiled. These information will be discounted to account for the value of money over time.

  1. Qualitative Analysis

This strategy is based on qualities of the stocks. This includes factors of number-crunching fundamental analysis. What makes this strategy different is that it goes deeper. This strategy also considers the management team of the company, the history of both of the team, the vision of the team and the company in general.

  1. Technical Analysis

Technical analysis in stock picking is a unique approach compared to other strategies. It’s all about crunching numbers and diving into data from a company’s past performance. Unlike the other methods, technical analysis doesn’t bother with the company’s future goals or the team’s vision. Instead, it focuses solely on what the company has been up to in the past 7-9 years. As an example, for companies that had their ipo in 2014 or earlier, there’s a wealth of data available showcasing how they have performed over the years. This historical data becomes a crystal ball of sorts, helping analysts predict potential future trends.

Just like any form of art, the stock picking arena also has strong and weak players. There are some who seem to get it right all the time and others seem to falter more often than they succeed. The question then for individual investors is how to make good use of the stock pick tips that are offered daily by the experts in stock picking.

The art of stock picking relies greatly on intuition. Some people might look online and read “IOTA mit Euro kaufen“, and feel that they know IOTA stocks are worth investing in. You can use the three methods discussed earlier when picking your own stocks. You may have compiled the data and yet still find the success or failure of the given stock completely opposite to what the data told you. But with practice, your intuition should be able to give you enough guidance that data alone cannot.

Note that these tips offered to us by experts are not infallible. So don’t take them as such when devaluing your experience. The best strategy is still to combine analytical resources with your intuition to make a wise decision when picking stocks. Remember that at the end of the day, you may win some or lose some as that is the life of a stock market artist.

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