As a trader, you will continuously want to find the best stock to invest in. Yet, after some time, you will find out that finding good stocks is difficult. Sometimes, even the best money managers in the world fail to consistently find a good stock to buy.
Stocks that look promising can sink within minutes, while other not-so-good stocks may go up in a flash in the stock market.
Why is it difficult?
You have to remember that everyone in this world, including the smartest people, are coming to the market every day to buy and hold good stocks. So, good opportunities usually are founded fast.
At the same time, undervalued stocks also get bid up quickly to fair value. Now, you have to be realistic. You are competing against thousands, if not hundreds of thousands, of professional money managers.
The winning stock stories you have heard are coming from those who successfully made more money the way a lottery winner does. They are just in the right place at the right time.
Just because they win, does not make that a good investment. They are just lucky.
What is the better way?
You do not know the specific stock that may be the best from year to year and so does everyone. You just need to believe that publicly traded companies’ market share will continue to grow as they are in business to make money. They will do so in the long term.
Thus, you can own a lot of publicly-traded companies with a single trade by one or two index funds to diversify your portfolio. Of course, you are not going to double your growth rate any time soon, but you are not going to lose it, either.
The susceptible people who spend hours on the internet for “good stock investment” many times get left holding the bad investment.
Also read: How to Make Good Investment through Stock Trading?