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Stock Helper

Pick Better Stocks in 10 Easy Steps

Step 9: Monitor

Enter the ticker symbol of the stock you are researching in this box and press Go. The links in this step and subsequent ones will automatically be customized for that specific stock.

Enter Ticker:

Decide under what circumstances you'll want to buy more or sell some or all.

As soon as you make the trade, record the decision-making process that went into your decision. (If you kept notes in the above steps, that should be sufficient.) By writing down why you bought and what you think the stock's real value is, you'll be better able to decide what to do in response to price changes and new information about the company. Also decide under what circumstances you plan to buy more, or to sell part or all of the shares you just bought. As an example, if in the coming months the stock falls on no substantial news, would you buy more? Value investors often say yes. Risk-averse investors often say no, and in some cases set a "stop loss", under which they automatically sell if the stock falls a predetermined amount. Also, we encourage you to be ready to admit it if you made a mistake (even the best investors make them), rather than to hold a dog just hoping it'll go back up. If your calculation of the stock's value has fallen more than its price or if you find something better to invest in, then you should be prepared to cut your losses and move on.

Decide what to monitor once you buy.

As soon as you make the trade, decide what you'll be monitoring going forward, and write it down. You'll probably want to watch for company news, insider trades, quarterly reports, and (possibly with an alert) price changes. We also recommend monitoring your stock picking performance relative the overall market or other appropriate benchmarks: it's the only way you'll know how you're really doing. Having either an unreasonably positive or negative view of your stock picking ability will hurt your long-term performance.