In the field of stock investment, stock selection is a very important link. A good stock selection method can help investors find high-quality stocks, so as to obtain higher investment returns. However, some investors will adopt some wrong stock selection methods, which may bring higher investment risks and even lead to investment failure. The following will introduce 5 wrong stock picking methods, and analyze their risks and shortcomings.
1. Follow the trend stock selection
Follow the trend stock selection means that when investors see other people buying a certain stock in the market, they also buy the stock. This method of stock selection is risky, because market conditions may change at any time, and other people's behavior is not necessarily a scientific decision. Investors should rely on personal judgment, combined with their own independent analysis of the market, rather than blindly follow the trend.
2. Listen to media comments
Some investors like to listen to media reports and comments on stocks, and then choose stocks based on these opinions. However, media reports are often just personal opinions and may not accurately reflect the real situation of the market. Investors should rely more on their own analysis and experience to make decisions, rather than simply relying on the opinions of the media.
3. Only pay attention to the stock price when choosing stocks
Some investors only pay attention to the stock price of the stock and ignore other factors, such as company fundamentals, industry dynamics, etc. However, stock price is not the only factor in judging whether a stock investment is advisable. Investors should make decisions based on the fundamentals of the company and the development trend of the industry, and comprehensively consider all aspects of information.
4. Don’t pay attention to sectors when choosing stocks
In the stock market, stocks in different sectors have different characteristics and risks. Investors should choose different sectors according to their own investment strategies and risk tolerance. However, some investors do not pay attention to the differences between different sectors, so that they ignore the importance of sector selection in stock selection.
5. Ignore the liquidity of the stock
The liquidity of the stock refers to the ease of buying and selling the stock, which is usually measured by the daily trading volume. Some investors ignore the liquidity of stocks, which makes it difficult to sell quickly or hold a large number of stocks when buying or selling. Therefore, the liquidity of stocks should be considered when choosing stocks to ensure a more flexible and agile investment strategy in the stock market.
To sum up, stock selection is the basic link in stock investment, which is related to whether investors can obtain ideal returns. These five wrong stock selection methods are relatively common in stock investment. Investors should overcome these mistakes, analyze and make decisions based on fundamentals, industry conditions, market dynamics and other factors, so as to make more scientific and accurate decisions.