How to Improve your Stock Selection Purchases

Identifying which companies are sure things if not easy money is determined by your own professional savvy. Consider what profession you are in; as an artist one would know who are the big paint manufacturers, utensils and other materials experts; if they've been around they'll stick around etc.

Instructions

Difficulty: Moderate

Things You’ll Need:

• Trade magazines

Rercognize the Major Industries

1. Recognize the number of industries that exist in a market and the number of excess players in the industry; the more complex an item such as computers, drives etc the greater the barriers to entry that exist, therefore, if the # of competitors is weak as in less than 6, you know those companies are standing to make profits now.
2. For example if I heard on the news that products of toys manufactured overseas were going to go up the best time to invest in domestic toy manufacturers is obviously now- people react to the news and do not expect to make purchases or investments based on bad news! Identify what the ongoing market is, such as the toy manufacturers- buy the trade magazines, and voila you know which toy manufacturers are going to be good money; plan for a few year investment as well! Generally brand recognition and consumer attitudes and preferences last a while;
3. Find out whether the company you buy will have prices going up or down; if you are late on something or seem late it may be ok in that the firm's stock may go up and up to the$300+ range unless you see there were more competitors joining in recently at which point profits will decline.