By Steve Reitmeister
Even with the recent correction in hand, there is not much argument amongst experts on the long term picture for stocks. That being the bull market will return and new highs will be recorded in 2022.
Let’s also remember that the average bull market lasts for over five years and the current one is only 22 months into its journey. So there is still plenty of time on the clock.
Unfortunately one should not fool themselves into thinking that the 120% gain since the beginning will be the pace of gains going forward. As we have seen the last several months gains have slowed down considerably along with an serious spike in volatility.
For some investors this means the solution is to buy index funds and let the chips fall where they may. However, for most of us, we want to find an edge to outperform to enjoy superior results. That is the focus of my commentary today.
Research Method 1.0
In order to tell you the solution, I first need to point out the problem. And that is the flawed way that most of us research stocks. For that purpose I will give you an outline on how the average person handles this vital task…then I will point out a better path.
Let’s say you read an article where some expert is touting 3 stocks they think are terrific. From there we will likely surf your favorite investment websites for additional information which is some combination of the following:
- What does the company do? (Industry/Sector)
- Review recent price action
- Explore a few key metrics on growth, value or company financials
- Read additional articles that tell us a bit more of the growth story for the company that gives us confident it is an attractive investment going forward.
So what’s the problem with this approach?
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