Stock Picking – The Big Challenge For Investors by Wouter van Eeuwijk, Winvestor
Investing isn’t easy. For every person who does well and finds long term success, there are several more who fail to generate the returns they are looking for from the stock market. If you want to be successful long term and realize returns as high as 15%, there are two questions you will need to answer.
- How do you make sure you are buying the right stocks?
- How do you make sure you are buying them at the right time?
Stock picking is the most important and most difficult part of investing. Having discipline and knowing when to sell are important, but 99% of your success will be determined by the amount of work and research you put into researching stocks before you buy them.
For many, the stock market seems too much like gambling. They correctly see that there is risk involved, but they don’t understand how those risks can be managed. Maintaining long term success and generating significant profits is possible, but it requires you to manage those risks and do the research that is necessary to succeed.
The Importance of Doing Your Research
When you buy a stock, you are buying a part of that company. If you want to ensure that you are making a good investment, then you need to make sure that you understand that company backwards and forwards. You need to know everything about that company, both its strengths and weaknesses. With the right preparation, you can manage the risk much more effectively and pick the stocks that will provide you with the best returns.
Though there are many products on the market that claim they can help you invest smarter, most cannot deliver on what they promise. Basic financial data can only show you so much about a company’s fundamentals, and you’ll be still be at risk of making a bad decision.
If you are only looking at recent performance, you are missing the bigger picture. Instead, you should make sure that you can examine the company’s performance and finances for every year in the last ten years. You may also want to view each of the last ten quarters individually. Many products also let you compare a few financial ratios between companies, but these also give you a limited picture of the company’s fundamentals and trajectory. To identify the right stocks and know when it’s the right time to buy them, you need more.
How Do You Read The Numbers?
If you really want to have a long and successful career investing, you need to go much deeper in your research. The free and low-priced resources don’t provide you with enough data or analysis to make the best investment decisions.
With all of the financial data and reports from the last ten years, you can really start to understand how a company has been performing. Instead of using one or a few ratios, you should incorporate several financial ratios into your analysis. This will give you a much more comprehensive and accurate picture of a company, and this will help you determine if it’s truly a good investment. You are buying stakes in these companies, so make sure you pick the right ones!
Undertaking this large task of data collection and analysis will work, and it can deliver amazing results, vastly improving your investment portfolio. Unfortunately, this strategy also takes an incredible amount of time. Even if you’ve only identified 50 interesting companies, generating 50 ratios for each will mean you need to calculate 2500 ratios in all. With all of this information, it can be even more difficult to analyze and organize it in a way that’s understandable. As you broaden your potential investment options and include new industries, sectors, and indexes, the task will only get more time-consuming and difficult.
If you work for a large financial institution or hedge fund, you might have the manpower you need to do this, but for the solo investor, this type of project is virtually impossible. It simply takes too long to collect this information and turn it into actionable intelligence.
We Provide You With Large Datasets and In-depth Analysis
After recognizing this problem, we created Winvestor to give every investor the tools and data they need to really win. Winvestor has collected, and continually updates, the financial information from over 38,000 different companies (42,000+ stocks) around the world. What would take a single person years to complete, we have provided in an easy-to-use platform, so that investors can finally use data to drive their decisions.
Winvestor doesn’t provide “expert advice” or a “magic formula” that will help you invest better. We provide the cold, hard facts. We place all of the most important financial data right at your fingertips, so that you can make the most informed investment decisions possible.
Examine Financial Statements and Combined Ratios
If you want to look at a company’s finances, we provide you with a complete picture from the last several years. Income statements, balance sheets, and cash flow statements are all available on Winvestor. You can view averages as well as individual statements from each of the last 10 years and the last 10 quarters. This level of detail is irreplaceable and will give you far more information than you would have access to otherwise.
In addition to financial information, you can use Winvestor to view financial ratios and develop a deep understanding of a company’s fundamentals. Instead of using one or a few financial ratios to compare companies, Winvestor allows you to view over 55 different financial ratios. A single financial ratio can’t give you enough information to determine if a stock would be a good investment, but with our full collection of ratios, you can compare companies much more comprehensively and identify the companies that have the best potential as investments.
Though 55+ different financial ratios will give you a much more complete picture of a company, we also realize that it can be difficult to analyze and compare these ratios simultaneously. In order to save our members time and help them use the data more efficiently, we provide optimized rankings that combine these ratios into comprehensive rankings.
Each company profile has a Rankings page where members can look at several rankings at the same time. The rankings are marked in purple, green, yellow, orange and red, so that you can instantly see the areas where a company is strong and the areas where it is weak. Unlike a single ratio, these combined ratios provide much more information and help our members identify strong investments in a shorter amount of time.
Additionally, Winvestor produces overall rankings for every company in its system. Using financial information and the 55+ different financial ratios that are generated, we are able to create a ranking that considers growth, quality, and value. These rankings communicate the overall strength of the company as an investment opportunity, and streamline the stock-picking process for all of our members.
The Three Signs of a Strong Investment
Winvestor rankings are based on the concept that growth, quality, and value are the three most important characteristics to pay attention to when you are evaluating different stocks. Depending on your specific financial situation, the nature of your existing portfolio, and your financial goals, some of these characteristics may be more important than others, but they are all necessary if you want to evaluate a stock comprehensively and accurately.
Growth and quality help investors identify which stocks to buy, and value tells investors when to buy them.
These rankings are used to identify the very best investments available in order to help our members quickly and confidently select stocks for their portfolios. In fact, only 12% of the 38,000 companies in our system are ranked as strong investments. This ensures you can easily find the companies that have the best fundamentals and present the best opportunities for significant returns.
The First and Last Investment Tool You Need—Winvestor
Though Winvestor only considers a small percentage of stocks to be good investments, this still means that thousands of stocks in our system have reasonable Winvestor rankings. The extremely detailed financial reports and ratios can then be used to help you compare different stocks and determine which are most appropriate for your own portfolio.
From our selection page, you can organize companies by index, market cap, sector, industry, region, and many other important fundamental criteria. Once you have selected a specific stock, you can then look at specific financial ratios and data to determine if its mix of growth and quality appeal to you and would provide you with the most value.
Stock picking will always be a difficult process and the greatest challenge for an investor. No matter what, there will always be an element of risk, but with the right knowledge and information at your disposal, you can minimize that risk and value stocks appropriately. Winvestor has the screening and analysis tools to transform the way you pick stocks and invest. Use our combined ratios and comprehensive rankings to improve the strength and profitability of your investment portfolio.
A Personal Note from Wouter van Eeuwijk, founder of Winvestor:
“We’re here so you don’t have to take on the markets alone.”
As a former Formula 3 racing driver, I know the importance of having a solid team behind me. And I learned from my own investing mistakes that just because a company makes a great product, doesn’t mean it’s a great investment.
In 1999, I was involved in an accident that ended my racing career. During my rehabilitation, I began using voice recognition software manufactured by a leading multinational speech products company that was listed on both NASDAQ and European exchanges. At the time, the company in question had a market capitalization of almost $10 billion USD.
Yet in little less than a year, the company imploded in a wave of scandal and malfeasance.
The tragedy for me and thousands of other trusting independent investors is that all the signs were there, just below the surface. But to get at that information, I would have had to go beyond the talking-head analysts and rosy corporate reports and evaluate the company the way top investors like Warren Buffet do.
As I began to get serious about investing, I realized trying to succeed as a “lone-wolf” investor was a sure road to financial ruin. So I began my search for a platform that would provide all the critical data in a format that allowed me to make clear-headed long-term investment decisions without spending weeks crunching numbers.
What I found was not encouraging. Sure, there are dozens of websites that claim to serve independent investors. But none of them had what I was looking for — sophisticated screening, analysis and valuation tools that offered the widest choice from among all the major and emerging markets.
So I put together the smartest team I could find and created Winvestor, the ultimate investing tool for optimizing your investments. Now, I wouldn’t think pulling the trigger on any stock without using Winvestor first.
I’m convinced once you try Winvestor, risk-free for 9 days, you’ll be with us for life!
To Your Investing Success,
Wouter van Eeuwijk,