10 SECRETS OF PICKING HOT AND WINNING STOCKS EXPOSED

1.      Get informed and stay informed; Read the daily newspapers, stock digest and analysis bulletin, investment journals and ask questions any time concerning stocks. If your broker can’t answer them seek answer elsewhere. Subscribe to investment publications, blogs and visit websites that promote investments in stocks.

2.      Look for stocks that are being ignored by most investors; concentrate on small and mid-cap companies that are under-followed by professional analysts. They are the best place to find growth stocks and with cheap prices.

3.      Attend annual general meetings of companies you intend to invest in; This will give you chance to know the industry players, top performing directors and the industry benchmarks in terms of  profits, earns per share, dividends, bonuses and company financials generally. Read annual reports of companies.

4.      Scrutinize the company’s balance sheet. Look for such things as research and development spending and available cash. At least a company should spend 10% of its retained earnings on research and development or on investments or in new assets.

5.      Don’t buy and forget; We live in a rapidly changing world and products get obsolesce occur more quickly than ever. Monitor your stocks! Sell in good market and buy in bad marked.

6.      Keep portfolio turnover to a minimum. You should know you are charged double commission each time you sell or buy- one by the broker and the other by the exchange commission. This is outside VAT tax.

7.      Don’t over diversify; I think you can get adequate diversification with a portfolio of 15 to 20 stocks or equity holdings. This will be easy to monitor for exiting and entering so as to avoid losses during bears and bulls.

8.      Don’t expect immediate gratification. I am basically a buy and hold investor. My holding period is two years and five years.

9.      There are some areas that seem to outperform others; like technology, oil and gas, FMGs like drinks, beverages and daily need goods.

10.  Watch out for the management team of company: Some directors are management gurus and the stocks of every company they manage seems to do well. For example Steve Jobs of Apple.