Top down investing
This is an approach where you pick a trend or mega trend of an industry that is booming and you think will continue to grow. An example may be the mining industry.
It would be a fair argument to say that mining companies should continue to do well as there is a finite amount of such resources in the ground and the booming economies in India and China should ensure that demand for many metals should continue to remain high. With the top down approach you would then go off and research all the main mining companies, look at their financial ratios, order books, management teams etc and invest in the best one within that sector.
Charting or Technical Analysis
This is a very specialised style of stock picking where you use charts and other technical data such as trade volumes to try to predict future movements. This approach is not for the faint hearted as it can prompt you to trade very frequently. However this style of stock picking has been around for many years and continues to remain popular.
Stick to one sector
At the risk of maintaining an extremely poorly diversified portfolio (which can be very dangerous) the idea is to only stick to a limited number of sectors. This should allow you to focus your efforts on researching only one industry then simply trade the companies within that industry as they rise and fall in the performance battle for market share and profits within that sector.
The best approach is to try and build your own stock picking strategy using the best features from any you like.
If you want to find out more information about smart stock investing or how to learn to invest money or even learning to trade commodities please visit the authors website.
AFP - Mark Cuban, the controversial owner of the National Basketball Association’s Dallas Mavericks, denied insider trading charges that were filed by the Securities and Exchange Commission (SEC).
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