People are always looking for ways to buy a good stock. But unfortunately most of them are not qualified to do. If you are one of them, your best bet is a no-load mutual fund that is rising in value. But if you don’t want this option, then yes, you can pick up a good stock by doing less than an hour’s work.
Don’t be taken in by the Wall Street hype of research. It is all hogwash as the method by which they do so is useless. Don’t listen to a broker’s advice. They are simply after your money. Don’t spend time reading the company prospectus. It is a worthless document meant to ensure it adheres to all the government rules and regulations. If you notice the prospectus of a good company and a poor company are more or less the same.
Forego the Annual Report, it is a mirage. Most of the information it contains is over a year old. So it is useless. Of course, you can get a report from Morningstar. They keep tabs on all the financial details of the company. The only thing that they won’t tell you is if the stock will go up in value.
So in short, all the traditional methods of carrying research are useless. Now what do you do?
The Internet lists some of the best performing mutual funds. Visit www.smartmoney.com or www.yahoo/finance.com. These are the best sites. Write own the top 5 mutual funds (their symbols). Then visit www.bigcharts.com. Type the symbol for any of the fund. A chart will spring up showing you the price performance of that fund. If it is shooting up by a 25-degree angle or more, it implies the fund manager has successfully managed to pick stocks. On the top of the chart, you will see a legend for Morningstar. Click on it. On the new page, you will see the major holdings of this fund. Again you have to obtain the symbols for the top 5 stocks and view the chart for each one. If that stock is rising at a nice steady pace for a period of at least 6 months or more, you have struck a goldmine. Repeat this with various funds till you have got a list of stocks you prefer.
What you have done is allowed a professional stock picker to do all your work and now you are benefiting from his expertise free of cost. Also remember that if the stock goes down, you should sell. You may see it going up but there is no assurance the boom-time will last. So be ready to sell.
Tags: A Good Stock, stock