How Do I Pick the Best Stocks? I Don’t!

One of the first things I tell prospective clients who are looking for investment help is that I don’t advise on buying or selling individual stocks.  Why is that?  Laziness?  Lack of confidence?  Don’t have the time?  Yes, all of the above.


It is my opinion (and it’s my blog so you have to read it) that if you are going to trade individual stocks, you need to do enough research to know two things solidly in your mind:

  1. What is a good price to buy the stock?
  2. What is the price at which you will sell?


If you don’t feel you can make an informed decision based on understanding a company’s financials, management, competition, and future business prospects, you are likely to fail as a stock trader.


Add to that, to have a diversified portfolio of many stocks in many different industries, you must be prepared to do that research and have designated price points in mind for multiple stocks.  Are you prepared to be an expert in energy, manufacturing, housing, tech, entertainment, agriculture, and finance?  I’m not.


Last, to have a multifaceted portfolio of stocks, you need lots of money to invest.  One share of Apple costs about $128 as of this writing.  Tesla is trading around $600/share.  Pfizer around $42/share, etc.  If you have $1,000 to invest, you could buy 3 shares of three companies.  Or, you could buy shares of 500 companies by investing in an S&P 500 index fund.


To sum up, my personal investments are mutual funds and ETFs that make bets on the growth of broad sectors of the world economy such as stocks of US big and small companies, stocks of foreign companies, and bonds.  I’m not trying to guess which specific company will win the autonomous driving or vaccine race.  I’m betting that someone will, and my money will rise no matter who it is.


Also, yes I am too lazy, scared, and pressed for time to do all that research on individual stocks.  Let the well-paid analysts and fund managers do it for me.


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