What are some good stocks to invest in? This is a common question asked by beginning investors. Finding good stocks to invest in is the first part of successful investing. Knowing when to invest in a stock and when to sell the stock are also part of the equation. Picking good stocks to invest in over the long term is a different matter than picking stocks for short term investing. Fundamental analysis of stocks is the basis of long term value investing. Short term investing also requires that the investor know the fundamentals of the stock but short term investing also requires a sense of market sentiment and skill in technical analysis of stocks. The plain fact of the matter is that there are stocks that will appreciate year after year for decades and there are stocks that will and fall over a few months. Before looking for good stocks to invest in an investor should decide which road to take in search of profits.
Value Investing
Four years ago we published an article, Investing in Beer. Our point was that there are consumer products that will always be with us and which sell well in both good and bad economic times. We noted that successful stock investing comes from doing research on the company and market sector into which you are buying.. When investing in beer, or any other stock, the investor should look at how the stock has done year in and year out with swings in the market. Read what the company has said about its prospects and its plans and just how accurate those statements turn out to be over time. No matter how well a company is doing its stock holders are always interested in more money. So, buyout offers that are sweet enough can change the thousand year old ownership of a beer company overnight. When that happens and you are a shareholder you need to decide whether to sell at an inflated stock price when a hostile takeover is in process, wait to see if the price goes higher, or wait for the takeover and take your chances. That is the point of investing for short term profits.
Short Term Profits
Very commonly when someone asks about good stocks to invest in they are looking for a tip about a stock that very shortly will sky-rocket in price. Sometimes such stock movements are easy to predict and sometimes they are not. In our recent article, Germans Buy US Companies, we mentioned two buyouts of US companies by German companies. In each case the price paid was above the previous market value and anyone who owned the US Company at the time of the announcement made a very tidy short term profit. The trick to this approach to finding good stocks to invest in is knowing where the action will be, getting in just in time and exiting promptly with profits in hand. One clue that can help is when a takeover artist such as Carl Icahn expresses an interest in a company it probably has hidden value. In all such cases do your own homework and avoid any investment that you do not understand.