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How To Pick A Profitable Stock and Get Rich | How To Invest In The Stock Market

Whether you have millions to invest or a couple hundred dollars dedicating a

certain amount of money to buying stocks is easy choosing the right stock to buy

is the difficult part if this sounds like you then don't worry we've all

struggled to make wise investment decisions at one point or another and

luckily I'm here to guide you in the right direction in this video I will

share with you how to pick a profitable stock and get rich and if you're new to

the channel then hit the subscribe button below for more life-changing

content so first off what is a profitable stock for the purpose of this

video a profitable stock is any stock that is undervalued that you can acquire

and then sell at a later date in order to realize a profit now while this

sounds easy enough and it can be when using my advice there is some work to be

done to be able to identify these stocks and this potentially lucrative decision

requires you to understand some core fundamentals with respect to the

companies you are investing in firstly you will need to assess the price

knowing the price of shares in their history as you evaluate a company stock

will indicate whether or not you may be able to acquire a profitable stock

second there's revenue growth when a company's revenues increase typically so

well at share price buying stocks and companies that are consistent with their

revenue growth is generally a safe bet thirdly there are dividends search for

companies that pay high dividends to the shareholders and invest in those only

thriving companies can pay high dividends next is market capitalisation

companies with the large market caps are usually large and diversified enough to

be negatively affected by a small change in market factors think about companies

like coca-cola or ExxonMobil they are large diversified companies who have

given their investors good returns for decades next our historical prices when

on the hunt for a stock it isn't enough to only look at the current value of the

shares also take a look at the company's share history you can date back five ten

or fifteen years just so you know how the company has been performing over

long periods of time companies who have good historical share prices are your

best bet however keep in mind that the past doesn't

to find what will happen in the future yet it still remains an excellent

indicator of what you can expect finally there's the industry before you buy

stocks you need to take a look at the industry in which the company competes

if it's a failing or fading industry then be advised to back off on the other

hand if it's an industry that is on the rise then you can feel safe to invest in

its stocks now that you know what pieces of information you need to pick a

profitable stock you must employ sound investing principles to ensure you

actually achieve the financial results you want so here are five you must

absolutely follow number one don't buy stocks based on emotions according to

Warren Buffett one of the richest men in the world success and investing doesn't

correlate with IQ what you need is the temperament to control the urges that

get other people into trouble and investing here Buffett is referring to

investors who make bad investment decisions based on emotions one of the

most common ways investors negatively affect their portfolio returns is by

engaging in trading over activity and that over activity is triggered by our

emotions number two pick the companies not just the stocks sometimes one can

forget that behind every stock you see is an actual business you need to keep

in mind that by buying a share of a company's stock you automatically become

a part owner of that business when you're searching for the right stock you

have to consider several investment factors but your buying decisions will

be better made if you see yourself as one who wants to buy into the business

and not just the stock with this mentality you will ask yourself relevant

questions regarding the business these questions include how does this company

operate what is its place in the industry as a whole who are its

competitors what are its long-term prospects and does it bring something

new to the portfolio business as you already own with such questions asked

you will most likely make the right decision when buying into a company

stock number three make plans for uncertain times every now and then

investors are tempted to sell off their existing stocks buy more or buy other

stocks however making decisions under duress may lead to the ultimate

investment which is buying high and selling low a

great tip here is to create a personal investment journal write down what makes

every stock in your portfolio worthy of holding on to all so with the clear head

write down the reasons why holding on to the stock in question could be a bad

idea ask yourself why am i buying lists out all the things you like about the

company as well as the potential opportunities you see in years to come

you need to have a set of clear realistic expectations what are the

metrics that count and what are the milestones you will use to determine the

company's progress when you have a well detailed journal you will be able to

detect the game-changers as well as the potential setbacks on the flip side you

also need to ask yourself what would make me sell sometimes there are very

good reasons to sell your stocks in as part of your journal write down exactly

what those doctors could be I'm not just talking about stock price movement

especially in a short term I'm talking about critical changes to the business

that may hinder its ability to grow in the long term here are a few examples of

why you may consider selling your stocks the company loses its biggest client the

new CEO starts taking the business in a different direction a major competitor

emerges or your investment thesis doesn't pan out over a set period of

time number four build up positions gradually

the course of time and not a specific time in particular is what is key to

reaping profits from stocks the most successful investors purchase stocks

because they expect to make profits over the years or even decades these

long-term profits come by means of share price appreciation and dividends this

naturally means you can take your time in buying if you want to reduce your

exposure to price volatility you can use the following strategies with the first

being dollar cost averaging dollar cost averaging means investing a set amount

of money at regular intervals weekly or monthly this set amount purchases more

shares when stock prices go down and fewer shares when there is a rise in

stock price overall it evens out the average price you pay in fact there are

a good number of online brokerage firms that allow investors to set up an

automated invest schedule next you can buy in thirds

similar to dollar cost averaging buying in thirds will help you dodge the

heartbreaking experiences of bad trading results here's how to buy in thirds

divide the amount you want to invest by 3 then pick three separate times to buy

shares this could be monthly quarterly or based on the company's performance or

events for instance you may purchase shares before a certain product is

released then invest the next third of your money into buying more shares that

the product is doing well in the market in the same vein you can divert your

money elsewhere if the product flops finally there is buying the basket if

you can't figure out which company in a particular industry will do the best in

the long term then go ahead and buy stocks in each of them yes

buy them all buying the basket will automatically mean you'll be under no

pressure to pick the best one this also means you won't miss out on profits if

one of the companies do well in the market you can use the profit made from

the thriving company to offset any losses from the failing companies this

technique will also help you identify which company is the best performing in

that particular industry with this knowledge you can increase your

investment in that company if you wish number 5 avoid trading over activity

last but not least on my list of stock buying tips is to avoid trading over

activity checking on your stocks every now and then is expected but that can

lead one to overreact to short-term events such short term events include a

change in share price due to factors like war a pandemic or a recession many

investors will make the mistake of focusing on these short-term events

instead of the actual value of the company itself this can prop the

investor to take uncalculated actions even when none is required if you notice

that your stock experiences a sharp price movement be sure to first check

what triggered the change before you make any trading decisions it may be

that the sudden change in share price is a result of mark a response to an

unrelated event it could also be that something significant has changed in the

business model of the company whatever it may be be sure it is something that

affects the long-term prospects of your business before you trade ask yourself

realistically our short-term factors like overloaded newspaper

or temporary price fluctuations relevant to how a well selected company will

perform in the long run how investors react to all the drama surrounding stock

pricing matters a lot remember the investment Journal I spoke

of earlier you can refer to that in times like these it will help you make

guided decisions during the times of unavoidable price fluctuations now you

know what aspects of a stock you need to understand before you invest and how to

be strategic in your investment dealings but I think it's also worth going over

just how profitable stock investing can truly be imagine if over five years

you've been vesting ten dollars every week and you have an average return of

eight percent by today that particular investment will be worth thousands of

dollars here's a real-life example on the 13th

of March 1986 Microsoft which was a new company at the time had its initial

public offering at that time you could buy a decent car for about ten thousand

dollars but what if you didn't what if you about $10,000 worth of Microsoft

shares instead well let me tell you according to CNBC calculations if you

had bought ten thousand dollars worth of Microsoft chairs in 1986 today in 2020

it will be worth sixteen million dollars you'd be rich as far as finances go

there is nothing that can secure your financial future success better than a

solid long-term investment let's go back to 1986 the time Microsoft went public

let's say you decided to split your $10,000 and buy ten different companies

with $1,000 each one of those companies being Microsoft the other nine companies

pack up enter out of business this will mean you've lost 90 percent of your

investment right wrong Microsoft still stands in your $1,000 investment in 1986

would be worth 1.6 million dollars today which is a whole lot more than your

initial investment of $10,000 keep in mind that I haven't even added all the

cash dividends who would have been receiving since 1986 see the power of a

good investment over time whether it's the skyscraper you acquired in New York

30 years ago or shares from coca-cola you purchased around the same time a

portfolio filled with solid long-term investments can withstand several

failures over decades will still give you satisfactory returns all thanks to

Khan found interest the problem with many

investors is that they are afraid of holding out for the long term many about

Microsoft's initial shares didn't hold on for three decades they bailed out

after their investment had doubled and missed out on enormous future gains a

small short-term fluctuation and share price and many investors would start to

panic such panic is unnecessary as it affects the investors ability to make

wise decisions avoiding wipeout risks is very important as long as you can

survive the occasional recessions depressions and liquidity crunches and

the company which you've invested in a remains valuable both in the short and

long term then your investment is safe thanks for watching if you want to go

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