Stock Picking

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What=s The Right Stock for Me?

By J.J. McCormick

What are the things you should look for while choosing a stock? If you asked that question to a group of people most would not know. At the begining of the year most of the investment club members chose their stocks by skimming through the stock listings until they found a company they had heard of before, or some even used the throwing darts method. Now I see that the members who are still active participants in the club do have a better system of choosing their stocks, but for the ones who still need some help here are some things to consider before investing.

Obviously you need to buy low and sell high, so with that said here are some tactics for trading.

The P/E ratio is a very helpful tool in finding a good stock. Usually the lower the number the less volatile the stock is. Less volatility means that the stock will stay on a steady trend and won=t bounce up and down a lot. So if you are looking for a long-term investment you can look at a low P/E ratio and guess that that stock will follow the trend it has had in the past. If you are a daily trader you might want a high P/E ratio so you can buy and sell at high and low points.

Demand for the product the company is making will determine how far up the stock will go. If the product holds high demand the stock will rise, but if people don=t like the product the cost spent on making the product will drive the price of the stock down.

The growth opportunities should also be a consideration when buying a stock. If the company has just released a great product but that=s all the company has, chances are that after the product has been outdated, which can be a short period of time depending on the market it=s in, the stock will go down rapidly.

Lastly, don=t forget background information. Before you jump into buying stock in some company you should know what you=re buying. Find out what the company=s status is. See what the trend of the stock has been, and make a guess as to how far the stock will rise in the future. Then decide at what price you want to sell the stock and stick to that plan unless something new comes up. Also look to see if the company will release any new strong products. With these tips your trading should be much more predictable and effective. Happy trading.