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No doubt proper stock screening is a time-consuming, in-depth and intensive process.
Understanding and forecasting business cycles for example is no easy task but the
rewards can be significant if you get the timing right.
History suggests a positive relationship between economic performance and the stockmarket.
No matter what screening criteria used, your goal should be to identify potential
stocks that will ultimately deliver you the desired rate of returns. Proper research
is important to ensure a good investment outcome.
Having taken into consideration the above stocks screening and research, lets
say you have come with a list of stocks that you believe worth buying - absolutely
underpriced. You may want to enter the market but are unsure of the price level,
you could look at some technical indicators such as the timing of entry. Technical
analysis should not be totally overlooked.
Charts are useful for short-term market influences and enable you to guess the suitable
entry level. Nevertheless, charts should not be taken as a primary decision-maker
as they are never the road to the future. Investors must recognize that stock prices
are ultimately driven by fundamentals.
Given the volatility of the investment markets, your investment should be reviewed
periodically as market changes from time to time. Proper diversification will help
you to smooth out the ups and downs of your portfolio. You may decide to combine
your stocks with bonds for instance.
If you are unable to handle the research but wish to invest in stocks, you may consider
managed investments or unit trusts as a viable alternative.
Unit trusts, a medium-to-long-term investment vehicle, allow you to have access to
an array of companies listed under the stock exchange. What is important is that
investors should learn to invest stocks fundamentally.
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