Value Stock Picks – Starting out

Your goal in generating a list of value stock picks will be to earn a return on your investment, while preserving your capital.  If you have not yet created a value stock portfolio, you can test out your assumptions by “paper trading”. This is a method in which you simply select some stocks, based upon your criteria, and keep track of them without actually purchasing the stock.

PAPER TRADING TECHNIQUE

Most investors, when getting into a new area of investing will traditionally try “paper trading”.  Many investors I know, who had been only doing equity investing, wanted to get involved with options.  Due to the dramatic swings in options, you have to have a lot of confidence in your trading skills.  Many investors will keep track with an Excel spreadsheet, which provides a simple method of keeping track of your paper trades, and allows you to gain confidence.

The same technique should be used for getting comfortable with your value stock picks.  Generate a list of stocks and paper trade for a few weeks.  Again, the objective of value investing is more long term, but this will help you get a sense of watching the stocks’ activity, and judging on the relative success of your picks.

MORE VALUE STOCK PICKING PRACTICE

While you are developing your knowledge of value stocks, make sure you have a good general knowledge of stock picking.  There are a number of resources on the web, along with tools to help you understand more about investing.

A few that we like include Yahoo Finance and Market Watch.com.  There is a wealth of information about stocks and the underlying publicly traded companies there.

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