How to profit from shares
Why you need an investment strategy
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If you're going down the DIY stock-picking route, then you'll need to get a share selection strategy in place. Because if there's one certainty on the stock market, it's the certainty of losing money by haphazardly picking individual shares on a whim.
It's the very rare investor that can consistently pick stock market winners solely through gut feel or intuition. Alternatively, forming a set of sensible guidelines and having the discipline to stick to them should keep you involved in more suitable investments.
Whether it's considering companies of a certain industry, or keeping to companies that exhibit certain financial criteria, remaining with what you know best and feel comfortable with should limit any stock market heartache.
Clear and independent thinking
The Motley Fool recognises that, for the novice investor, the stock market can be a bewildering place. There are hundreds of different companies out there, all spread over various industries. And with every company issuing a never-ending stream of corporate news and mystifying accounts too, there's a real danger of "information overload".
However, applying a clear investment philosophy leads to better investment decisions. The information overload is curtailed, as the number of investment possibilities reduces significantly. Becoming a market-beating investor means finding a suitable investment style and then continually developing it further.
Which strategy should you choose?
There is no one investment strategy that suits everyone. A good strategy is one that works for you by playing to your strengths and eliminating your weaknesses. For instance, if you're good with numbers then a strategy that focusses on detailed analysis of company accounts may suit you. A good strategy should also be simple to follow, easy to summarise and tell you when to buy and when to sell. And of course it should be based on sound investment logic.
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