This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Investing 101: Refine Your Research and Focus, Focus, Focus

NEW YORK (TheStreet) -- There's an old saying: "Jack of all trades, master of none." This describes a person who's capable at several things but not great at any of them. While this quality may get you by at your place of employment, in the stock market it gets you broke pretty fast. 

In part one of this series we discussed the importance of communication between companies and shareholders. I argued that it's the duty of every management team to portray an aura of honesty and integrity while also sending a clear and understandable message to help investors establish realistic expectations.

In part two, we dug a little deeper to help you understand who and what you are buying. At the same time, we agreed that investors have a responsibility to research disclosure documents so that she/he will know for themselves how well the company is doing. By and large, this is where so many investors consistently struggle. 

>>JPMorgan Sees Shift in WalMart Strategy as Sales Stagnate

In this article, we're going to discuss not only the importance of research but why investors must limit their research to only a handful of companies. The premise of "buying low and selling high" is known. But investors dismiss the idea that we can't and shouldn't attempt to follow everything.

It's enough of a challenge for an investor to know everything that needs to be known about just one stock. But with close to 6,500 companies listed on the NYSE, Nasdaq and AMEX, there isn't enough time in one day to conduct the sort of research necessary to learn even a small amount about so many companies spanning various industries.

Besides, even if you happen to be one of the lucky few who can retain "important" data, the chances of you making good use of that data in key situations will be limited to what the market considers "important." This means beating the market will still be proven difficult regardless of how fundamentally based and well-researched you think you are.

To that end, it is better to know "everything" about only a handful of companies as opposed to casting your net so wide that you lose track of what really drives your investments. And by "everything" I mean having enough knowledge about that particular stock that goes above and beyond the company's fundamentals. It's the only way for investors to realize a great opportunity when it comes knocking.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
AAPL $132.54 0.00%
FB $80.54 0.00%
GOOG $540.11 0.00%
TSLA $247.73 0.00%
YHOO $43.48 0.00%

Markets

DOW 18,232.02 -53.72 -0.29%
S&P 500 2,126.06 -4.76 -0.22%
NASDAQ 5,089.3620 -1.4320 -0.03%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs