How To Pick Stocks (Part 2): Assessing Value Cont.
There are other investment strategies that you can utilize in order to decide which stocks you should buy. These strategies only provide a broad outline. If you are a beginner to the stock market, you should definitely consult with a trusted broker or analyst in order to determine which strategies are best for your particular goals and financial situation.
Those who base their investment decisions on a qualitative analysis rely on having accurate information about the strength of a company before deciding whether to invest in it. Specifically, brokers and analysts who employ this strategy acquire information about the individuals in upper management. This includes information regarding their educational background, employment history, and their current tenure. In addition to these factors, qualitative analysis relies on information about a company’s business philosophy and business model.
These, and many other, factors determine the worth of company’s stock. Knowing the competence of those in upper management, what kind of product the company is selling, and making sure that the company has a sound business model are just a few of the factors that figure into a comprehensive qualitative analysis. However, the effort pays off and makes qualitative analysis one of the most effective strategies for picking stock.
Value investing depends on finding companies whose stocks are trading below their inherent worth. Those who employ this strategy rely on finding fundamentally strong companies with cheap stock. These investors believe that they will make money when market correctly values the stock price. This is considered one of the most successful strategies because it is advocated by some of the most influential and successful investors, such as Warren Buffett.
Because value investors do their homework and are familiar with a company’s fundamentals, value investing is considered one of the best long-term investment strategies. The slow and steady approach, coupled with discovering truly valuable companies, has provided good returns for a number of value investors.