STOCK PICKING STRATEGIES FOR DISCERNING INVESTORS:

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As long as the stock market exists, there must always be the bullish and the bearish trends in the market place. These are the two components that make up the stock market. What this implies is that for every single day that the stock market opens, there are people making money, and there are people who are equally loosing money at the same time depending on the direction of the market. As a discerning investor, you need to arm yourself with the strategies that are geared towards securing your investments and also ensuring that you profit from the market daily, regardless of the period on the floor, whether bull or bear. So in order to achieve this, your stock picking strategies and principles has an important role to play here.

The first principle a wise investor should adopt for success, is to go for value investing. This is one of the best known stock picking strategies. How do you go about this? Simply look for the stocks that are selling at a bargain price, but have strong fundamentals, which include the company's earnings, dividends, cash flow, and book value. These are companies that are undervalued by the market, but are sure to soar immediately the market corrects itself, which is certain that it will do. It is important to note here that not all prices that are down that are cheap. So a value investor will know how to do his due diligence before arriving at the conclusion that a particular stock is cheap or not. Price does not always determine whether a stock is cheap or not, the determinant factor is the fundamentals. E.g., if a company's share price suddenly drops from $20 to $5, it does not mean that the price is cheap at that $5, rather, a value investor will first of all find out why the price nose-dived. Is it as a result of over-pricing which the market is now correcting? Or is it as a result of some fundamental problems? Or just because of profit taking and other market forces which does not affect the company's fundamentals? These are the questions that a value investor must find answers to before investing his cash. The value investor knows that profits are made not just by trading of shares; rather, profits are made in stocks by investing in quality companies with strong fundamentals.

If you really want to make money in stocks, you have to sit down first, and ask yourself the type of investor you want to be. Ask yourself whether you are just trading in shares or whether you are investing for value. Don't follow the herd. Do your due diligence before investing. The internet has made things so easy today that you will get any information you need at your finger-tips. When you do this and remove greed, you will definitely make it big investing in stocks. Know when to exit and do so immediately, as waiting a minute or a day longer can wipe out a big fraction from your investment profits which are not a good idea at all.

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