Perhaps the most common challenge for investors is coming up with good investment ideas.
Where do you find them?
That’s part of what we do, here at Agora Financial Australia.
However, there’s no limit to where you can find good ideas.
But you do need to know what type of investor you are before you begin. As well as establishing your attitude to risk and money in general.
There are two broad categories of investor:
- fundamental investors and
- technical analysts.
Generally speaking, fundamental investors use detailed analysis of industry trends, profit margins and earnings metrics to find compelling companies.
They determine a ‘fair’ price for the company.
They then try to use gyrations in the stock price to buy under that value — and wait for their superior analysis to show up in future numbers and company announcements.
Technical analysts, however, places a huge premium on the price action of the stock itself.
The fundamental premise behind this is that the publicly available information about a stock is already in the price.
Therefore, a falling price signals danger, and a rising one potentially signals incoming good news.
Some investors take elements of both schools and combine them.
You’ll have to decide what works for you.
However, if you decide to use one methodology over the other, it will change how you find investment ideas.
A fundamental investor might analyse the market with different criteria to create a list of ideas.
They might scan for stocks with a high return on equity, for example, and then research companies that meet this criterion further.
A technical analyst might scan for stocks trading at fresh 52-week highs and rationalise that these stocks are trading at highs for a reason.
They then study the ‘chart’ to find further clues.
The important point is that there’s no ‘one’ way to invest.
Every person in the market has different timelines, motivations and risk strategies.
It’s a question of time in the market and studying to see what approach works for you.
Before the internet most investors, large and small, relied on their brokers to supply them with the best investment ideas.
Now investors can access and manage their own portfolios with many different sources of ideas.
Researching and narrowing down a list of potential investments could take days or even weeks.
Now, with only a few clicks, online stock screeners allow even the least-experienced investors to quickly narrow down stocks based on a wide variety of criteria.
If used correctly, stock screeners can be one way to find quality stocks for your portfolio.
Understanding what all the different metrics mean and how they are used to filter out stocks that meet a certain criteria can be overwhelming.
So let me show you some stock-screening basics.
First, let’s get started by checking out where you can go to set up your ideal stock screener…
I have a few to get you started…
This is by no means an exhaustive list, but it’s a good starting point to get you going.
By and large, most screeners offer the same tools and services.
Some tools are free, while require a payment.