Best Stocks to Buy
Dec 10th, 2009
What are the best stocks to buy? I’ve been asked this question by family and friends and my answer is always the same… “It depends”. There is no best stock to buy. At least there is no best stock for everyone. It’s like asking what are the best shoes to buy? If you are going to prom you might need a nice pair of loafers or high heels. If you are going out to the job site you will probably want a sturdy pair of steel toed boots. You get the point. When you ask what the best stocks to buy are, your question needs some clarification.
Answer a couple of questions for yourself about what your financial goals are for entering the stock market. Are you looking for short term gains? Are you willing to take higher risks with your money in order to secure those gains? What types of stocks do you currently own? Do you plan to hold onto the stock for a long period of time? Is one year a long time? When will you sell your stock? What is your profit target for buying these stocks? These are just a few of the questions you need to ask yourself before you can even start to get an answer to which stocks are the best buy for you.
The best stocks to buy if you are looking at the stock market as an investment vehicle are probably some of the blue chip stocks. You will want a reputable company with a long track record of growth and profits. The crash in 2008 proved that even the biggest seemingly strong companies are not immune to downturns. All investments in the stock market come with inherent risk. That being said, the stronger a company’s financial history the more likely they will be survive economic situations like these.
If you are looking for the best stock to buy for the purpose of day trading, then the most important factor to look at is the liquidity. If you are going to be buying and selling shares of a stock in order to make small profits on each transaction, you want that stock to be heavily traded. Some of the smaller companies have very low daily trade volumes, and often a larger bid/ask spread. Find a stock that is historically active and you will have a much easier time executing the trades you are making.
Of course the above aren’t hard and fast rules about what you should be buying in the stock market. If you are willing to take on more risk you can always buy stocks that are less known. The future superstar company is out there, and maybe you can own some stock. Deciding which stocks to buy really depends on what your goals are for those stocks. Once you have a better understanding of what you want to accomplish with your purchase you will be able to make a much more informed decision.
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