What You Need to Beat the Stock Market

Year 2009 is over now and with this we have entered a new decade. We all know that the world is still under the influence of the worst economic meltdown. After touching the lows in March 2009, stock markets have rebounded with the economic recovery. And, till now stock markets have surged 59 percent. But have you made any plans for your stock investment for year 2010? If no, then you must do something because with the economic recovery, stock markets will also grow and to cash the benefits from bullish markets, you definitely need a strong strategy and appropriate planning website.

Before you begin with anything, it is very important to ask a few questions from yourself. Is your stock performing well on the index? Do you wish to continue with this stock in this New Year? If your answers are “yes” then certainly your plans are strategies are well formulated and implemented. Continuing with your present financial security will pay you greater returns. But if your answer is “no” then definitely there is some problem. Either your strategies are not working the way you desired or there is something wrong with the stock itself.

You need to formulate your investment strategy now. Even if your instinct is saying something, you need to look deeper and research well to harness the profits from your investment. So, for year 2010, what you need to beat the stock market? The answer is very simple, you only need a few guiding principles to beat the stock market in this year.

Principle no. 1 – value investing is the key you need to unlock big profits – value investing cannot be defined in words since it exists only in psychology. So, how can you attain, value investing methodology? Well, investing is not a cup of tea, it is a serious business and therefore you need to carry that professional “attitude” with you. “Ego” is something which has been cursed time and again and is entitled as “biggest enemy of stock traders or investors”, so leave it aside. It is very crucial for you to accept if you are losing in stock market. Therefore, evaluate and analyze your own performance to S&P 500 index. Tracking your performance will help you analyze if you are at problem and the reasons for the same. If you want to invest for value then perseverance is the right guide for you. Whenever you calculate and form your trading plan then simply stick to it. Most traders sell off their securities even at small negative news. Don’t even listen to your instinct in such situation or to what other people say. It is your business, your investments are at stake and therefore you must do it all alone. Performance is delivered when you hold your stocks. If you don’t have “guts” to hold your security just because of negative news or bearish market then remember your investment performance will not be impressive. Long term is the buzz that you need.

Principle no. 2 – Right method – what you need to be a winner is the right method of trading. Value investing is only possible when you have that right method. So, where is this right method? Well the wrong method complements small term investment mostly. Now you can understand where you can find that right method. Yes! Long term investment is the right way for value investing. Most investors want to invest for long to achieve the results they want. Contrary to this, most traders believe in trading for small term to stay in market and play the game, again and again. You need to decide what you want to be, a trader or an investor. The fact cannot be denied that market has a belief that risk means more rewards. Investors chase those risky investments but again they are meant for short-terms i.e. appropriate for traders not for investors. Performance comes out when you invest while maintaining mental calm which is not possible in case of traders.

Principle no. 3 – Right tools – if you have made up your mind to achieve big from your investment, certainly everyone want to do that, but only few can attain that since they use the right tools to pick those “star performers”. Thanks to internet for making right tools available to everyone. Data mining software programs can really help you pick valuable stocks. Accessing websites that provide company information, stock news, tips, press releases and other tools, is a great just like picking great stocks. Some “just right” tools that you can rely upon are given below-

Valuation screening tool – screening tools are very useful for screening against value metrics for you. A lot of websites provide screening tools for paid and even free access. Yahoo screening tool for stocks is one such tool appreciated widely and is available for free.

Insider buying tool – crucial tool that can help you with latest updates on insider buying stocks. If you have insider buying or selling stock information then defiantly you can follow the foot steps of those wise insiders.

Including the principles stated above in your investing career can be really fruitful. Even if you are not able to practice these guides then at least try to do investing business seriously and sensibly. Your instinct, news, views of your friends, family or stock market geniuses can take your success away from you. Therefore, stop listening to what others have to say, research yourself and believe on actual facts and data and always use the “right tools” available.