You want to invest in stocks.Where do you start?How do you choose the stocks to invest in?You can pick stocks if you have the right information and tools.The SEC or the Bureau of Labor Statistics can give you information.You can get information and tools from your broker.You have many options for choosing stocks.
Step 1: Understand how analysis works.
The largeMacro tendencies observed in the economy are the basis of macro analysis.Understanding how major forces are affecting the performance of the economy is your goal.You should base your investment decisions on your findings.If the economy is performing poorly, avoid overpaying for stocks and be sure todiversify your holdings.
Step 2: Access a graph or gather data.
GDP, interest rates, unemployment rate, and consumer price index are some of the most important macro indicators.Balance of trade and inflation rate.You can either download the historical data to excel or use online tools.You can access the data by going to the websites of the Bureau of Economic Analysis.
Step 3: Take a look at and interpret the data.
Look for the direction that the numbers are moving in.Take into account historical data, current data and news.The data will be converted to percent for either Year over Year or Quarter over Quarter.It is possible to determine the percentage of change for an indicator.Divide the nominal GDP by the value from the previous year.This shows the GDP growth percentage over the course of a year.
Step 4: Pick your investments.
It is possible to invest in a broad based stock or stock alternative.Pick a group of stocks that reflect the movement of the broader economy and track an index like the S&P 500.This approach allows you to enjoy the growth of stocks in the US without taking on too much risk.It's not helpful to decide which individual stocks to buy with macro analysis.It allows you to understand the performance of the economy.When you think the economy will improve, you may want to buy stocks.
Step 5: If Fundamental Analysis is right for you, make a decision.
To use fundamental analysis, you need to know what the stock is worth.This will not be what the stock is currently being traded at.Buy if the value is higher than the stock price.Sell if you think the value is less than the stock price.Don't expect a lot of results.Other investors often come to different conclusions about the value.
Step 6: Look at the variables.
To determine the current and future value of a company, here are a few variables to look into.
Step 7: The data from the SEC can be gathered.
You can find the information in the company's earnings reports.The Investor Relations area of the company is where you can order a company report.Their contact information will be available on their website and they may even offer a link to download the reports.The EDGAR system of the SEC can be used to view or download this information.
Step 8: You can search for information.
Full-service brokers, research firms, and the internet all have free reports.Public information is limited by many online brokers.
Step 9: Pick your stocks.
You should make a decision about the company's value once you have all the information you need.The value of the company can be determined using the data.Buy stocks based on projections of earnings or good news for the company.Relative value can be used to compare assets of different companies.When choosing companies to compare, try to stay within the same sector.You might want to compare Apple, IBM, and Hewlett Packard - Compaq.
Step 10: If Technical Analysis works for you, make a decision.
Technical analysis doesn't focus on estimated value.It charts the stock market's price movements.Short-term trends can be used to make subjective decisions about the future value of a stock.Long term trends are not useful for investing decisions because most technicians are traders.Since prices move on rumors, misinformation, and unexpected news, price movements are used to determine investor psychology.
Step 11: There are online tools and charts.
Stockcharts.com is a place where you can learn.There are simple, free, comprehensive and in-depth materials available online to understand Technical Analysis.Investopedia has an article that can help you figure out what software package is best for you.
Step 12: Use a broker.
Guidance and tools can be found on the sites of many brokers.You should investigate what each broker has to offer if you are interested in technical analysis.You can find out what tools they offer by visiting their websites.A variety of advice, tools, and information is offered by full-service brokers.They will charge more for their services.Customer service, commission fees, and services offered by online brokers vary greatly.Before selecting a broker, know what you're looking for and research the broker's background.
Step 13: Pick companies.
You can use the information you've gathered and the advice from your broker to choose stocks.The data can be hard to understand.