How to Pick a Stock

24
Bumper logo

Bumper Bites

Finger Pointing At Checkbox


Deciding what to invest in is a struggle all teens and beginning investors have. I mean there are over 2,000 stocks on Bumper and deciding to invest in just a few is difficult. So, how do you pick stocks? 

Well first, we have to determine our investing goals and purpose for investing. To make it easier, below we have listed four buckets of objectives to choose from. So, why did you start investing?


  1. Capital Growth = seeking stocks that will appreciate in value, 
  2. Capital Preservation = looking for stocks with little to no risk in order to preserve capital (frequently used by older people like our grandparents)
  3. Source of Income = utilizing stock gains or bond payments to provide an income
  4. Speculation Trading = high risk, high reward trading that involves speculating that a stock’s price will rise in the near future (short-term)


Most teens have the goal of capital growth. It is important to understand yours, so you can properly measure your success and determine what type of stocks to invest in. For capital growth, a teen investor might be more focused on buying blue-chip stocks, while a speculative trader would be more interested in penny stocks.


Now that you have a better understanding of where your purpose of investing lies, we can move on to what industry to invest in. This one is easy. It’s a simple question for yourself. What industry do you enjoy reading and hearing about?


Finding an industry you are interested in or already know can help you determine the market leaders and companies that are top performers in the industry. These performers may already propose great investments, however, to assure they live up to the hype, we can do some analysis. If you are unsure of the industry, check out its latest news to find some of the hottest companies in the market. 


Over the last few bites, we have covered several ways to analyze a stock but now you can use that information and apply it to pick one winner. It's not easy. Investing is not a get-rich-quick scheme. It takes time, but that effort can pay off! 


Your investments are not always guaranteed to be successful, which will make it important to diversify your portfolio. Having multiple stocks in a variety of your favorite industries will help you reduce risk! 


Alright, let’s review.

  1. Uncover your purpose and goals for investing.
  2. Find an industry you love!
  3. Analyze top performers to reveal a winner.


This is easy to read about, but now it's time for you to give it a try. When you get back, we will be checking out our first investing strategy, dollar-cost averaging!

Source: Investopedia | How to Pick a Stock

Previous Div

Next Div

Disclosure: This is not an offer, solicitation of an offer, or advice to buy or sell securities, or open a brokerage account in any jurisdiction where Alpaca is not registered (Alpaca is registered only in the United States). All investments are subject to investment risks, including possible loss of the principal amount invested.
Disclosure: Alpaca does not make recommendations with regard to fractional share trading, whether to use fractional shares at all, or whether to invest in any specific security. A security's eligibility on the list of fractional shares available for trading is not an endorsement of any of the securities, nor is it intended to convey that such stocks have low risk. Fractional share transactions are executed either on principal or riskless principal basis, and can only be bought or sold with market orders during market orders.
Equip Solutions, Inc. ("Bumper") and Alpaca Securities LLC ("Alpaca") are not affiliated and neither are responsible for the liabilities of the other.

Technology is offered by Equip Solutions, Inc.

Brokerage services are provided by Alpaca Securities LLC ("Alpaca”), member FINRA, a wholly-owned subsidiary of AlpacaDB, Inc. Clearing services are provided by Velox Clearing LLC (Velox) and Vision Financial Markets LLC (Vision). All three are members of the Securities Investor Protection Corporation (SIPC), which protects securities customers of its members up to $500,000 (including $250,000 for claims for cash) per customer. Explanatory brochure available upon request or at www.sipc.org.

This is not an offer, solicitation of an offer, or advice to buy or sell securities, or open a brokerage account in any jurisdiction where Alpaca is not registered (Alpaca is registered only in the United States).

View Alpaca's disclosures at: https://alpaca.markets/disclosures

Alpaca does not make recommendations with regard to fractional share trading, whether to use fractional shares at all, or whether to invest in any specific security. A security’s eligibility on the list of fractional shares available for trading is not an endorsement of any of the securities, nor is it intended to convey that such stocks have low risk. Fractional share transactions are executed either on a principal or riskless principal basis, and can only be bought or sold with market orders during normal market hours.

The content on this website is for illustrative and informational purposes only and any historical returns, expected returns or projections are hypothetical in nature. Investing involves risk & investments may lose value, including the loss of principal. Past performance does not guarantee future returns or results. Before investing, carefully consider your investment objectives, time horizon, and overall risk tolerance as well as the information stated in the product offering prospectuses.