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How do I Choose the Best Stocks to Buy?

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  • Written By: Kristie Lorette
  • Edited By: O. Wallace
  • Last Modified Date: 19 November 2016
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    Conjecture Corporation
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Prior to choosing the best stocks to buy, conduct some research on stocks and the companies offering the stocks. Gather information on the stock performance, the history of the stock performance and determine the future direction of the company. Once you have the information, you have what you need to determine the best stocks to buy because you can choose stocks that will allow you to reach your financial goals.

Investors can find information on a stock and its performance in numerous ways. First, any financial or investment website typically offers stock research. By inputting the name of the company or the stock symbol, you can pull up charts, graphs and textual information that details out the stock performance over time. Review how often the stock price changes, when it has changed over time and by how much the price adjusts.

Stock performance data provides a big-picture view on how stable or volatile the stock is. For example, if the stock price has steadily increased over the past five years, but does not have wide swings in price over the timeframe, then it is not a volatile stock. If the stock price changes from month to month over the five year period and the price changes are in large quantities, then it is a volatile stock. Volatility should be matched with your risk tolerance.

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Your research should also reveal the history of the company. Follow how changes in the company affected the stock price. While historic data does not predict the future earnings of the stock, it is an indicator. Reviewing historical data on the stock price as well as what has been going on the company allows you to choose the best stocks to buy because you can more accurately predict the ability for the stock to earn money.

Your final assessment of all of this information requires you to choose stocks that are in line with your financial goals. For example, if you are looking to grow your money over time, the best stocks to buy are those that have a history of gradually growing over time. If you are looking to make money fast, then you should consider those stocks that provide big returns in short periods of time. The best stocks for your personal situation are those that allow you to reach your own goals.

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