Stocks

How I Pick Stocks To Invest In

Methods and strategies you can use as well

Photo by Austin Distel on Unsplash

When I was doing my MBA our teacher once invited in a money manager who was very successful. Someone asked him how he picked stocks. He said, “Simple. I go to the new low list on the NYSE every day and look at those stocks.”

I thought he was going to explain some kind of difficult financial filter or algorithm. But the simplicity of his system woke me up. Hey, maybe it isn’t as hard as you think to pick stocks and be successful.

Of course, what he did not say is that he studies the stocks on the new low list. Most of the stocks on that list probably deserve to be there. Many have problems that are going to take a long time to work out. But it made me realize that you can find gems in a list using a simple filter like this.

Shorting Popular Stocks Options

I use a similar system to find stocks to short. Actually, I use a popularity system. If a stock is in the news for a dramatic announcement, I look at its call options.

Often these options will be significantly overpriced, as everyone jumps into the upside popular play. Then I short the nearest dated out-of-the-money call option. Often these will expire in less than one week.