8 Proven Tips on How to Pick Stocks That Will Beat the Market

Millennials are less likely than any other preceding generation to invest in the stock market. There are a variety of factors that drive that anti-investing sentiment including crippling student debt and wage stagnation.

What does all of that mean for you? Nothing!

Just because a bunch of people aren’t taking advantage of something great doesn’t mean that you shouldn’t. People become millionaires investing in stocks every day and if you make the right moves, you can too.

Screaming about how rich you’ll get investing is easy though. Knowing how to pick stocks that are actually going to drive those dramatic results for you is another thing entirely.

In this post, we share 8 outstanding tips that will help you zero in on outstanding stock opportunities that will allow you to out-hustle average investors and get paid faster!

1. Define Your Goals

If your goal is to outpace the stock market, we’ve got bad news for you… That’s a really bad goal.

Not in intention, mind you. Sure, it’s great to want to do better than the average investor. What’s missing from that ambition is the time frame in which you want to find success.

For example, do you want to outpace the market over 50-years of steady investing? Do you want to try to outpace the market on a daily basis by partaking in high risk/high reward trades?

Understanding what your goals are will form your how to pick stocks strategies so be clear on your intentions before dumping money into the market.

2. Follow the News and Act on It Intelligently

One of the primary drivers behind fluctuating stock prices is the news. For example, if a plane crash took place, investors might think that fewer people are going to be inclined to fly. Because of that assumption, investors would sell off their airline stocks en-mass which would drive those stock’s value down.

If you want to pick stocks that are going to dominate the market, keeping an eye out for big news that hits an industry so you can capitalize is important. In our airline example, you might buy 100 under-priced airline stocks after a market panic and watch them bounce back in the following weeks at a huge profit.

3. Source Professional Investment Opinions

Nobody can predict with 100% certainty how a stock is going to perform. There are a number of savvy analysts though that get things right a lot of the time and offer free stock analyst ratings that you can use to advise your trades.

Scour the web to find stock advisors that have a proven track record of picking winners. Stay abreast of what they suggest and do your own diligence to determine whether or not you agree with their advice.

4. Extensively Research Companies

It’s easy to look at a company like Netflix and say, “People like Netflix. I like Netflix. I’m going to invest in Netflix.” That rudimentary thought train isn’t a bad place to start when strategizing potential buys. It’s, however, a horrendous perspective to rely on alone.

Netflix is billions of dollars in debt and has yet to make clear what its plan is to sustain its momentum without borrowing more money.

Understanding facts like that before buying into a company is essential to ensuring that you don’t purchase a bubble that’s going to pop.

5. Diversify

No matter how much of a how-to pick stocks master you become, adversity always has a way of catching up with investors. When unforeseen disaster strikes, whole industries can lose massive portions of their value.

Good companies aren’t impervious to those negative trends.

To insulate yourself from market fluctuations, make sure that the great companies you pick for your portfolio represent a diverse set of niches that aren’t likely to rise and fall in relation to one another.

6. Talk to Real People

Some information about a company can’t be found on an earnings report or in a spreadsheet. Some information needs to be sourced directly from company employees.

If you’re planning on pouring a ton of money into a stock, before you do, get in contact with an employee of the company that you’re interested in. See if you can take that person out to coffee and pick their brain about company culture and red flags that may not be in the news.

As you do people-based research, stay aware of what constitutes “insider trading” so you don’t end up getting into trouble.

7. Pick Stocks That Issue Dividends

When solid companies are doing well, they issue dividends to their shareholders. These dividends are cash rewards that you get per stock that you own in the company.

Divined producing stocks are usually reliable which makes them safe buys. Furthermore, when you get cash dividends, you can take that money and reinvest it in more stocks which will further propel your portfolio’s performance.

8. Find an Outstanding Mutual Fund

Learning how to pick stocks can be a tricky business. Even the most dedicated of hobbyist investors might find themselves getting overwhelmed by all of the information that’s out there.

To make things easy, consider investing in a mutual fund and letting a professional investment firm do the heavy lifting for you.

You can read more about mutual funds here.

Learn How to Pick Stocks and Get Ready to Start Raking in Returns

People that learn how to pick stocks go on to do great things for themselves. We hope that we’ve managed to shed some light on what it takes to make stock decisions and wish you the best as you embark on your investing journey.

For more tips on everything from making money to navigating life as a parent, check out more of the newest content right here on our blog.

Jeff Campbell

Jeff Campbell is a husband, father, martial artist, budget-master, Disney-addict, musician, and recovering foodie having spent over 2 decades as a leader for Whole Foods Market. Click to learn more about me

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