When investing in stocks, an investor needs to be aware of what they are putting themselves into. This is to say that, they should have the facts right about the securities they hope to invest in. Stocks, in this case, come in many characteristics and an investor needs to be fully aware of their behaviour before committing their money. A characteristic of stocks is that, they are those that are value-oriented and others are growth oriented.
Value oriented stocks are those that are trading at a price that is lower than what they are really worth. An investor buys them with the hope that, the price will rise above the stocks worth and that, they will then realize a profit, hence adding value to their investment. On the other hand, the growth oriented stocks are focused on future prices. They look at the potential of the company, and not necessarily the securities.
Under the growth stocks, there are those that grow faster than others and it is upon the investors to find to more about them. There is no laid out formula as to how the stocks experience growth, but the growth is based on speculation. As an investor chooses to look at growth as a stock picking strategy, they should first make an observation of how they have performed in the past.
Another stock picking strategy that an investor may chose to adopt is the income factor. As we can see, there are value and growth stocks and income stocks as well. Stocks that generate dividends are popular among many people today. Many investors have preference over high yield stocks, or those that guarantee them a steady income.
http://www.stockmarket-results.com/stocks/stock-picking-strategy-the-parameters-that-one-needs-to-look-at/comment-page-1
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