It's been a tumultuous year for the stock market.
As trade wars with China were beginning to boil over, the world was struck with a global pandemic. Simultaneously, stay-at-home mandates exacerbated existing volatility in the crude oil markets.
The stock market reeled back from the shock, and we witnessed some of the sharpest drops in the history of the market (just check your Personal Capital app around March 20th, 2020 and look at your net worth).
Now, it's still see-sawing as we continue through the year.
Most analysts feel optimistic about the future. However, many traders and investors are wondering how to adjust their strategies in the interim.
By and large, the best piece of advice out there is to research aggressively – even more than you did before.
Unlike bear and bull markets where things are rapidly trending in one direction, we're in a period of monumental swings, and you want to ensure that you're poised to swing in the right direction by placing your money in the safest bets.
The goal = avoid buying when stocks are high, and be sure to avoid selling when things are low. That is the trouble with investing in most cases, emotional investors buy high and sell low.
That is the purpose of this article today!
Here's some advice for stock researching for 2020 and what stock research sites to consider!
Stock Research Sites & Advice for 2020
When it comes to stock research sites and doing proper research – the general notion is that if investing is easy, everyone would do it.
To create results and success investing, though not easy, it is possible when you do your homework.
Independent research is valuable, but there's also a variety of stock trading courses that allow you to gain a comprehensive introduction to the market and help to avoid mistakes most beginner traders make.
1. Read More than Just the Numbers
Now isn't the time to try something extraordinarily risky or outside the norm.
Prices are much lower than they usually are, which can make investors quick to load up on the low-priced stock. That's not the best strategy, though.
Instead, stick with the stocks you know, or vigorously research before you buy. This isn't a smart time to trust a piece of advice from your friend without researching it yourself first. You must get the entire picture, not just the current price.
If you aren't familiar with a stock, pan out, and look at the broader picture of the company. Read the news, monitor their stock announcements, check their financial updates and results, and read every interview with prominent people in the business before buying into an unfamiliar stock.
>> See also; look into beginner investment options.
2. Look for the Bargains
When the entire market drops like it has, even stellar stocks drop well below their value.
It's an ideal time to try and suss out those undervalued stocks. It's much easier said than done, but with adequate research, it's possible.
Try to look into the company's business models and see how well you think they're going to fare throughout the COVID-19 pandemic. Were they uniquely poised to adapt when the crisis hit, or did they falter?
It's crucial to look beyond business models, though. Look out for companies that are carrying a lot of debt. Avoid companies that are cyclical or overly dependent on the economy.
When trying to find undervalued stocks, you're looking for stocks that are priced low. You want to research and find those companies with above-par leadership, proactive plans, and a solid financial foundation that doesn't depend on a bull market to thrive.
3. Find Long-Term Investments
If you're a day trader, this one might seem less relevant to you. However, it's reliable advice in this current climate.
A lot of companies will take a while to rebound in a meaningful way. So, excessive trading might not pay out as much as it usually does.
For long-term investments, it's imperative to research the entire picture. Look into their trends, their leadership, and their ability to weather this virus and the other global uncertainties right now.
If you aren't looking for long-term investments, your research on your short-term trades needs to be even more stringent than usual. Don't expect things to behave as they usually do. Instead, use all the tools in your trading software to analyze and hypothesize potential scenarios.
4. Frequent Stock Research Sites & Investment Sites
Stock market research sites are abundant online. Perhaps you already have a couple that you follow and read regularly. Maybe you're a premium member of a few analysis platforms. In times like these, it's important to follow even more.
- Sign up for newsletters.
- Check for blogs and advice across several websites before trading or investing anything (best blogs for investing & finances)
- If you use social media, consider following these investment news sites' social media pages so that you never miss a valuable insight or update.
5. Follow Standard Research Advice and Lean Into Reliable Markets
While 2020 might seem abnormal, in many ways, how you research should be the same. It's all about doing a deep-dive and making sure you understand all the relevant data.
The four basic steps to researching a stock include:
- Gather the Quantitative Data (i.e., the numbers).
- Synthesize the Important Data (like revenue, income. EPS, ROE, and ROA)
- Research the Human Elements of the Company (i.e., leadership, competitive advantage, values, etc.)
- Contextualize the Research and Compare to Competitors (i.e., what do the numbers mean and how do they compare?)
If you aren't sure where to go, stick with reliable markets. Analysts feel pretty favorably about the following markets in 2020:
- Food Industry/Commodity Markets
- Legal Industries
- Fast-Moving Consumer Goods
Ultimately, you want to find companies with decent cash flow and balance sheets. When you research, you want to find a company that has a history of paying out its shareholders. Look for large-cap, dividend aristocrats who gain their prestige from their increasing dividend payouts.
When it comes to research, it's all about being as thorough as possible. Rather than relying on historical trends, you'll need to do a lot of future forecasting regarding the virus and potential outcomes.
The best bet is to play it safe and rely on your own research. There are so many low-cost stocks right now. If you can invest correctly, you stand to gain a lot of money in the long run – as long as you do your research.
This was a quick guide, and this is by purpose.
Too much content, too much knowledge can be overwhelming. The purpose of this article was to provide some basic information to get you going on your way – whether you're new to the investing game or learning.
Regardless, be sure to do your homework and always consider options when it comes to stock trading and even alternatives such as ETFs or mutual funds.
Skylar Hammond is a writer for True Trader who specializes in topics such as stock trading, personal finance, and forex. He focuses on helping beginners and experts alike learn more about the market and improve their trading skills.
Josh writes about ways to make money, pay off debt, and improve yourself. After paying off $200,000 in student loans with his wife in less than four years, Josh started Money Life Wax and has been featured on Forbes, Business Insider, Huffington Post and more! In addition to being a life-long entrepreneur, Josh and his wife enjoy spending time with their chocolate lab named Morgan, working out, helping others with their debt and recommend using Personal Capital to track your finances.