How To Choose Stocks

Choosing Stocks

So you have a virtual portfolio with tons of cash, where can you start? This is often the biggest road block for people just getting started with investing, there is always so much to do! Luckily, HowTheMarketWorks has tons of tools to use for making your first picks. This will help you learn how to choose stocks.

Popular Stocks- Get Quotes and Look At News

If you do not have any stocks in your portfolio, we will show you a rotating list of the most popular stocks on your Open Positions page.

You can also access this page from the “Trading Ideas” page on the main menu bar (Click Here to see).

However, before you start trading, make a short list of a few companies you might want to buy, then get a quote, look at their Chart, and read some of their Current News. Links for all 3 of these are on those same lists, but you can also find them by getting a quote for that symbol on our Quotes page (Click Here to try!)

If you don’t know the symbol of the company you are looking for, there is a Symbol Lookup built into the quotes page.

Doing Stock Research

“But Wait!”, you say, “These are just some of the companies I’ve already heard of and see every day. Wouldn’t I want to invest in companies that are growing faster and I might not know about yet?”

Well, yes and no. The best advice investors usually follow is the classic saying “Buy What You Know”

Buy What You Know!

The best way to start when buying stocks is to buy what you know, not trying to follow stock tips or read a bunch of technical analysis that you can’t follow. Think of it this way: if you already know a company, they have done well enough in the past to already become a household name today. This gives you, as the investor, a big advantage; you can see how that company is doing just by looking at their stores and reading normal business news.

Ask yourself the following questions:

  • Have they started to open new stores around me lately, or are they closing some shops?
  • Does there seem to always be a lot of people you know using their products, or are they still more obscure?
  • Does their current news look positive or negative?

If all three of these are positive, then this might be a good place to invest.

What Are Other People Investing In?

We have several lists on the site of the “Most Active” stocks in the markets, these are stocks that are bought and sold the most in the actual markets in the last trading day. Looking at this list can give you an idea of which stocks are generating a lot of “Buzz”, and investors are getting excited about them. You can use the same Quotes and Market News features to see whether or not you think this stock might be worth more in the future, or if the buzz is likely short-lived.

What Are Professional Investors Investing In?

Another good way to look at stocks is to try seeing which are the biggest ETFs and mutual funds, and see what stocks those funds have invested in. These are the stock picks from seasoned professionals; they might not always be right, but they are usually “wrong for the right reasons”. By looking at the make-up of some big ETFs (such as SPY and QQQ), you can get an idea of what to look for in a company.

On HowTheMarketWorks, we also have professional analysts’ opinions available on almost all US stocks to give you a good idea what the experts are thinking: on the Trading page the Chaikin Power Tool will give you one opinion (with a report on why it is ranked that way) and on the Quotes tool the last tab is “Analysts”, which has a composite of several different analyst ratings on a particular stock. If all the analysts are in agreement, it might be a good stock to look at.

Sign Up For Investing Newsletters!

If all that sounds like a lot of work, you can also get emails about what analysts are saying about some of the biggest stocks on the market! If you want some of the best market news, with great analyst insight as to why certain companies are weaker or stronger! Check out these newsletters:

Pop Quiz!

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1 of 5) What tools does HowTheMarketWorks have to help you choose stocks?
2 of 5) What is the most common winning investment strategies for new beginners?
3 of 5) How can you find stock news about any company?
4 of 5) What should you look for when buying stock of a company you know?
5 of 5) How can you tell what professional stock analysts recommend?

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