Do you know what the top tips are for picking stocks are? No one can tell the future, but we have compiled three of our top tips to getting your investment portfolio to make some real returns in the future. Just because a stock is hot, it doesn't mean that it's a really good long term pick for your portfolio. The front page of the New York Times can tell you what is hot, lets take a look at some different tips for the investing world in general are.
1. Do your research. Just because something is trading at 5 times earnings, doesn't mean it's an incredible deal. In fact, just the opposite might be true. If its really supposed to be trading at something like 10 times earnings, why do you think it's so low? The old adage: if it's too good to be true, it probably is holds firm in this situation. Big Wall Street investment houses spend years trying to run various numbers and calculations on different scenarios to determine what the exact valuation of a stock might be. If a stock's valuation is too low, there is a good chance, that the stock might have some problems associated with it, like impending competition, government inquiries, or even litigation problems.
2. Go with what you know. If you are a computer software engineer, you might be best suited to analyze software businesses or maybe even internet stocks that use a lot of software in their business. This will help you get a better understanding of what you are buying and how the business deals with its costs.
3. Get financially literate. Do you know what a balance sheet is? An income statement? A statement of cash flows. These 3 are the groundings of what it takes to really understand a business' current and future performance. Learn them and get to know how and what they are and how they are used to base an investment.
These are really just the tip of the iceberg when it comes to learning about investments and their potential. Visit our site today to get more tips, resources, and a blog about different investment tips.
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