Picking Stocks

My knowledge on inventory selection is not very structured. I have not used a systematic way to pick stocks. This is my first attempt to develop rules and techniques. Therefore, this task plays an important role in formulating a set of rules to fill the gap in the overall investment strategy. In addition, reading this article is useful when you can see the results of this process in the future. My understanding of inventory selection is influenced mainly by Warren Buffett and Benjamin Graham.

Our first illusion is stock picking. Can someone choose to choose there or stock there? We wish to select shares based on the belief that stock price selection will work well in the future. Among investment advisors, there is the illusion that constant value and constantly and predictably can be raised by selecting stocks. I think that the most effective way to really understand what happened when we considered investing in mutual funds is to return to World War II.

For mutual funds, investment companies and people planning funds are actively managing them. This may not be suitable for some investors. They may think that they do not know how fund managers choose "good" stocks or that they are too expensive (especially in the long run) to invest in such mutual funds. This is the reason why Index Fund exists. Index funds are mutual funds that are managed passively by fund managers. Although they are less than traditional mutual funds, they often show better performance than traditional funds. Index funds can not select stock separately by fund managers, but will follow the stock price index such as Standard & Poor's 500. As these funds reflect the performance of the index, we do not need fund managers.

Should I invest in funds, stocks or both? The answer depends on the time you want to invest. By carefully selecting mutual funds or index funds, you can invest funds and diligence fund managers. Index funds are even easier because they move up and down depending on the company you are tracking, industry and market type. Personal stock investment takes the longest time as it needs to judge about management, revenue and future prospects. As an investor, you try to distinguish between money inventory and financial disasters. You need to know what they did, the way they earn money, the risks, the prospects in the future.