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4 Tips to Help You Buy Better Stocks

4 Tips to Help You Buy Better Stocks

Trading in the stock market can be both lucrative and devastating. This kind of investment is different from proactive investments, like house flipping, where you buy a rundown house, fix it up, and resell it for a much higher price. There you have control over your investment – the amount of effort and labor you put in improves your chances of selling for a profit.

But, buying and selling stocks is usually very non-proactive where you simply wait for prices to rise before selling for a profit. It seems like gambling, but the difference is, you can do research on the market environment and potential company you’re about to invest in so you can make an educated prediction on whether its stock prices will rise or fall.

Here are four more ways that can help you choose profitable stocks:

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1. Invest in companies making money.

Most new investors go into stock market trading thinking they can pick a random startup, buy some stocks, and wait to see if prices rise or fall. This makes it more like gambling and less like investing.

If you want to lower your chances of buying bad stocks (and save money), you should choose a company whose market you can understand, and carefully check the company’s financial history to see if they’re on the way up or down. Don’t rely on weird statistics, like random spikes in prices, but base your insights on gradual increases in stock prices and company revenue.

Even if you can’t tell from a company’s financial records whether it’s going to prosper, understanding the company’s market allows you to predict the upcoming overall environment, like if you’re well-versed in the augmented reality field and foresaw the huge boom Pokemon Go would bring for all augmented reality startups. Or if you’re more knowledgeable about mineral resources, you could try investing in new mining operations.

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2. Try to choose leaders instead of companies.

The most successful businessmen made their lucrative mark by thinking differently. For example, Jeff Bezos of Amazon introduced predictive analytics where he theorized that studying an individual buyer’s purchase history would provide better insight on which products to recommend to him.

Most stock market investors will focus on the company – think outside the box and focus on the people behind the company. Like seeing the forest for the trees, even if a company’s financial history looks bad, if a renowned guru just joined their team, you can expect great things in the future for that company and it would be wise to buy those stocks while they’re low.

3. Are there any competitors?

You found a new startup with over 1000 employees and approved loan applications for the construction of a fairly sized factory. Sounds great, right? Then you find out it’s planning on manufacturing cherry, vanilla, and fruit-flavored sodas. Turn away. Even if a particular company seems solid with ample financial backing and a large employee team, you should think twice before investing in it if its market has a lot of competitors.

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The soda market is huge, with the top brands already saturating the market with their different-flavored products. Unless this new startup is offering something radical, like glow-in-the-dark beverages, it will be a challenge for it to survive among the other established companies who are selling the same exact products.

4. Pay attention to the weather!

Buy stocks when it’s raining and sell them when it’s sunny. Why? Researchers found that people’s planning behavior is affected by the weather and temperature. In particular, they found that people buy less when it’s raining and buy more when it’s sunny – they found this leads to stocks underperforming when it’s drizzling and performing better when the sun is shining.

Of course, the weather’s effects on the stock market aren’t massive, but if you’re planning to invest in an iffy startup, why not buy their stocks on a rainy day when chances are their prices are lower. This means less risk for you because if you decide to sell your shares, you just need to wait for a nice sunny day when their prices are likely to rise (even if just a little).

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Investing in the stock market can be like gambling, but if you follow these tips you’ll lessen your risk of buying bad stocks.

Featured photo credit: Olu Eletu via images.unsplash.com

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Last Updated on January 21, 2020

How to Develop a Millionaire Mindset in 6 Simple Steps

How to Develop a Millionaire Mindset in 6 Simple Steps

We all like to dream about being financially wealthy. For most people though, it remains a dream and nothing more. Why is that?

It’s because most people don’t set their mind to achieving that goal. They might not be happy in their current situation but they’re comfortable – and comfort is one of the biggest enemies of growth.

How do you go about developing that millionaire mindset? By following these simple steps:

1. Focus On What You Want – And Take It!

So many people are too timid to admit they want something and go for it. When there is something that you want to accomplish don’t think “I could never actually do that”, think “I could do that and I WILL do that”.

Millionaires play to win, not to avoid defeat.

This doesn’t mean to have to become a selfish jerk. What it means is becoming more assertive and honest with yourself. You don’t have to grab off other people. There is a big pot of unclaimed gold in the middle of the table — why shouldn’t you be the one to claim it? You deserve it!

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2. Become Goal-Orientated

It’s almost impossible to achieve anything if you don’t set firm goals. Only lottery winners become millionaires overnight. By setting yourself attainable goals, you will get there eventually. Don’t try to get rich quickly — get rich slowly.

Let’s take the idea of making your first million dollars and expand on what kind of goals you might set to get there. Let’s also say you’re starting at a break-even position – you’re making enough to get by with a few luxuries, but nothing more.

Your goal for the first year can be having $10,000 in the bank within a year. It won’t be easy but it is doable. Next, you need to figure out the steps you need to take to achieve that goal.

Always look at ways to make growth before cutbacks. With that in mind, you might want to see if you can negotiate a pay rise with your boss, or if there’s another job out there that will pay better. You might be comfortable in your old job but remember, comfort stunts growth.

You may also have other skills outside of your workplace that you can monetize to boost your bank balance. Maybe you can design websites for people, at a fee of course, or make alterations to clothes.

If this is still not enough to make the money you need to save $10,000 in a year, then it’s time to look at cutbacks. Do you have a bunch of old junk that someone else might love? Sell it! Do you really need to spend $10 on your lunch everyday when you could make your own for a fraction of the cost?

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If you are to become a millionaire, you need to start accumulating money.

Here’re some tips to help you: How to Become Goal Oriented and Achieve More in Life

3. Don’t Spend Your Money – Invest It

The reason you need to accumulate money is for step three. Millionaires tend to be frugal people, and that’s because they know the true value of money is in investing. Being your own boss goes hand-in-hand with becoming a millionaire. You’ll want to quit your regular job at some point.

Stop working for your money and make your money work for you.

Rather than buying yourself a new iPad, that $500 could be used to invest in the stock market. Find the right shares (more on that later), and that money could easily double within a year.

There’s not just the stock market — there’s also property, and your own education.

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4. Never Stop Learning

The best thing you can invest in is yourself.

Once most people leave the education system, they think their learning days are over. Well theirs might be, but yours shouldn’t be. Successful people continually learn and adapt.

Billionaire Warren Buffet estimates that he read at least 100 books on investing before he turned twenty. Most people never read another book after they’ve left school. Who would you rather be?

Learn everything you can about how economics works, how the stocks markets work, how they trend.

Learn new skills. If you have an interest in it, learn everything you can about it. You’d be surprised at how often, seemingly useless skills, can become extremely useful in the right situation.

Start developing the habit of learning continuously: How to Create a Habit of Continuous Learning for a Better You

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5. Think Big

While I advise to start off with small goals, you absolutely should have a big goal in mind. If you have a business idea, then that is your ultimate goal – to start that business and make a success of it. If you want to invest your way to millions of dollars and do little work other than research, then that is your big goal.

There is no shame in not achieving a big goal. If you run a business and aim to make $1 million profit in a year and “only” make $200,000, then you’re still significantly ahead of most people.

Aim for the stars, if you fail you’ll still be over the moon.

6. Enjoy the Attention

To be successful, you have to be willing to promote yourself and enjoy the attention to a certain extent. Now the attention doesn’t need to be on yourself, it could be on your brand, but attention definitely attracts money.

Never be embarrassed to get your name out there. That means finding a spotlight and being brave enough to step right up underneath it.

If you run a business, try contacting the local papers. You’d be surprised at how amenable they often are to running a story about you and your business, and it’s all free publicity.

Above all, remember: You control your own destiny. Push hard enough for anything and you’ll get it.

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Featured photo credit: Austin Distel via unsplash.com

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