The internet is full of places you can go to find stock picks. Are any of them reliable and consistent? By stock picks I’m referring to a recommendation to buy the publicly traded stock of a company. Companies issue shares of stock to raise capital to run their business. In turn, you and I buy shares of the stock and can participate in the growth of the company. Stock picks are given by those who feel they have some sort of edge in forecasting the future direction of the stock. This edge can be anything from the gravitational pull of the Moon, to a very academic review of the companies’ fundamentals and anything in between.
Stock picking can be a skill driven by a guru who has a knack for finding hot stock picks or it can be done using a very systematic method of finding stocks based on a fixed set of rules. The value of finding good stock picks can mean growing your money at a phenomenal pace. When market conditions are favorable stocks can increase hundreds and even thousands of percent in a matter of months.
Let me give you some examples of some of the profits available to you through a good stock pick. Market Trend Signal gave a buy signal on 10/4/10 for Cost Plus Inc. (CPWM), a casual home furnishing company. In just one month the stock has gained over 46%, that’s a profit of $4,600 on a $10,000 investment. Another example of a great stock pick is Travelzoo TZOO. We recommended the stock on 8/27/10 at $15 the stock now trades at over $35, a gain of more than 100% in a matter of months.
What could you do with an extra few thousand dollars made from a good stock pick? Listed are some things to consider when looking for stock picks. Ask yourself three questions. 1. Is there a track record of success? 2. Is there a specific rational for the stock pick? 3. Am I give exit criteria, either a target price to sell or a place to set a trailing stop loss. If you can answer these questions and go into each trade knowing your risk, how much you will lose if your stock pick is wrong, and how much you will make if your pick is right, you may have found a way to find good stock trades.
How do I find good stock picks? You can certainly run a Google, Bing or Yahoo search for “Stock Picks” and see what companies and services show up. You can then take some time to research each listing.