greenieS
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Stock picking or investing in individual stocks on the capital market is the process by which the investor chooses stocks through a systematic form of analysis that helps him determine if those stocks are worth investing in and adding to his investment portfolio. This process is also known as active management, which differs from passive management in that investors buy passive investment vehicles, such as exchange traded funds (ETFs). Stock picking can be done both long-term and short-term, depending on the investor's perspective on the stock price.
What else do you need to know about stock picking?
Stock picking is a laborious activity. When choosing a stock package, investors and analysts thoroughly study the financial statements of the company in question, analyzing its key elements and financial rates. It is a difficult process, as there is never an infallible way to determine what a share price will do in the future. However, by examining many factors, an investor may be able to gain a better understanding of future stock prices than by relying on assumptions. Because forecasting is not an exact science, an investor or analyst using any forecasting technique should include a margin of error in their calculations.
Because investing in individual actions is a very laborious activity, to do it well you need good hours of preparation. In order to invest in long-term individual stocks, for example, you need to spend a lot of time gaining that level of knowledge to help you earn. Moreover, in order to be successful in this field, you must be passionate about financial analysis and accounting, in order to be able to evaluate the situation of listed companies. Because in any company there are financial situations that you have to study, to know, you have to be up to date all the time with the managers' plans, to always read news related to the company in question in order to understand in which direction it is going and which is the opinion of the public and customers about this company. You also need to know information about the company's field of activity to see which way things are going. Or it's not good to invest in a declining industry.
If you do stock picking, you need to know what competes with the company whose shares you want to buy, because a company is not alone in a field and has a monopoly. There are always competitors and you need to be aware of what they are doing, how they are doing to see if a company you have invested in and whose shares you have bought is doing well and will keep up with new changes and technologies.
When we talk about stock picking, we start from the premise that the shares on the financial market are undervalued or not valued correctly, which would give the investor the opportunity to buy the shares of that company to wait for the market to realize that the shares were undervalued and their price increased. This is not the case today, because many transactions on the capital market are initiated by robots, which in fact all they want to do is speculate on these imperfections in a very fast way from the millisecond level. While we need time to process the information, to issue an order and so on. In other words, we are struggling here with artificial intelligence that consumes information and acts according to the instructions in the programming code, while we are quite late in success and can no longer benefit from the investment.
Example of stock picking:
Mihai is an investment analyst and focuses on the technology sector. After a very careful analysis, Mihai plans to buy the shares of a company (let's call it - ABC), which is a social network. He takes into account a number of factors when analyzing the actions of ABC. These include the company's previous year's revenues and profits and the current regulatory climate for technology companies in different jurisdictions. However, Mihai notes that ABC does not work well in some countries where it operates as a social media, but that this issue will not have a significant impact on its end result, because ABC is a diversified company that has developed other products over time. of its core product to include offerings covering a wide range of emerging technologies. Therefore, even if the company loses market share in social media, it has other sources of income to compensate for these losses.
Mihai believes that ABC's growth potential outweighs any disadvantage potential and that ABC is ready for big gains and gains. That's why he decides to buy the shares of ABC.
What else do you need to know about stock picking?
Stock picking is a laborious activity. When choosing a stock package, investors and analysts thoroughly study the financial statements of the company in question, analyzing its key elements and financial rates. It is a difficult process, as there is never an infallible way to determine what a share price will do in the future. However, by examining many factors, an investor may be able to gain a better understanding of future stock prices than by relying on assumptions. Because forecasting is not an exact science, an investor or analyst using any forecasting technique should include a margin of error in their calculations.
Because investing in individual actions is a very laborious activity, to do it well you need good hours of preparation. In order to invest in long-term individual stocks, for example, you need to spend a lot of time gaining that level of knowledge to help you earn. Moreover, in order to be successful in this field, you must be passionate about financial analysis and accounting, in order to be able to evaluate the situation of listed companies. Because in any company there are financial situations that you have to study, to know, you have to be up to date all the time with the managers' plans, to always read news related to the company in question in order to understand in which direction it is going and which is the opinion of the public and customers about this company. You also need to know information about the company's field of activity to see which way things are going. Or it's not good to invest in a declining industry.
If you do stock picking, you need to know what competes with the company whose shares you want to buy, because a company is not alone in a field and has a monopoly. There are always competitors and you need to be aware of what they are doing, how they are doing to see if a company you have invested in and whose shares you have bought is doing well and will keep up with new changes and technologies.
When we talk about stock picking, we start from the premise that the shares on the financial market are undervalued or not valued correctly, which would give the investor the opportunity to buy the shares of that company to wait for the market to realize that the shares were undervalued and their price increased. This is not the case today, because many transactions on the capital market are initiated by robots, which in fact all they want to do is speculate on these imperfections in a very fast way from the millisecond level. While we need time to process the information, to issue an order and so on. In other words, we are struggling here with artificial intelligence that consumes information and acts according to the instructions in the programming code, while we are quite late in success and can no longer benefit from the investment.
Example of stock picking:
Mihai is an investment analyst and focuses on the technology sector. After a very careful analysis, Mihai plans to buy the shares of a company (let's call it - ABC), which is a social network. He takes into account a number of factors when analyzing the actions of ABC. These include the company's previous year's revenues and profits and the current regulatory climate for technology companies in different jurisdictions. However, Mihai notes that ABC does not work well in some countries where it operates as a social media, but that this issue will not have a significant impact on its end result, because ABC is a diversified company that has developed other products over time. of its core product to include offerings covering a wide range of emerging technologies. Therefore, even if the company loses market share in social media, it has other sources of income to compensate for these losses.
Mihai believes that ABC's growth potential outweighs any disadvantage potential and that ABC is ready for big gains and gains. That's why he decides to buy the shares of ABC.
