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Stock Picking Techniques
There are a large number of techniques and strategies that are widely used by majority of investors for picking stocks. If you learn these techniques, you will be able to make the right selection majority of times when investing in the stock market. |
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Following are the most popular and commonly used these techniques:
- Quantitative Analysis: In this technique, the total price or value of the firm is calculated as the sum total of all its discounted cash-flows. In simple words, all the tentative profits of future are summed up to assess the company’s total intrinsic value.
- Qualitative Analysis: This technique uses various qualitative aspects, such as the industry scenario, brand name, and the business processes, to determine the total worth of that particular business.
- Value Investing Technique: This technique requires the investors to go for those stocks that are being sold at prices lesser than the company’s estimated worth, as reproduced in its fundamentals.
- Growth Investing Technique: In contrast to value investors, growth investors pick stocks that are being traded at prices higher than the company’s intrinsic worth, but have tremendous potential of growth in future.
- GARP Technique: It is a unique blend of the principles of both value and growth investing techniques. Here, the investors pick up stocks of firms that are undervalued to some extent, given their tremendous growth potential.
- Income Investing Techniques: This technique is apt for investors looking for steady income in form of high, sustainable dividends from the purchased stocks.
- CAN SLIM Technique: In this technique, decision is mainly based on a thorough assessment of company’s market direction, institution sponsorship, industry leadership, novel changes, demand and supply, and current and yearly earnings.
- Dogs of the Dow Technique: In this technique, investors go for stocks of the first ten of the thirty companies listed in the DJIA (Dow Jones Industrial Average) with highest yields of dividends.
- Technical Analysis: This technique is in total contrast to the aforesaid techniques that are solely based on financial analysis. It probes into the past stock market activity of the firm, instead of its present worth, to assess its price movements in future.
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The Art Of Stock Picking
 The subject of stocks is most talked about with regard to wealth accumulation and personal finances. After all, picking the right stocks and playing the market are no less than roller-coaster rides, with their own ups and downs. Picking of stocks refers to finding or selecting the good ones depending on a pre-determined set of standards, with the objective of attaining a return rate higher than the overall average of the markets. More..
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