During recession, investors must be more active in navigating the opportunities of the market stock to pick the best asset at higher discounts. Although those are harder times of the stock market, this is when you get chances to buy the best deals.
Considering the current Covid-19 driven recession of 2020, it is risky to invest in the stock market, especially on the companies that have high chances of bankruptcy.
Conversely, being an investor, you would want to survive the recession by picking the best-performing asset of the time that can go smoothly through economic instability. But how and what is the strategy behind a successful stock investment?
Well, in this article, you will get thorough details of how to pick US stock for investment concerning any industry sector or size.
How to US Pick Stock for Fast Growth & Income
Concerning the current Coronavirus induced recession, below given strategic measures might be helpful to pick a stock in the US, the country which is currently the epicenter of Covid-19. So, the risk of heavy stock market decline is much expected here.
Before proceeding to the stock-pick strategy, here are a few key takeaways to consider while you pick stocks:
- Know your risk level and then decide accordingly
- Make a strategic plan to choose which stock you should invest in
- Start with one stock first, then check the result of that stock pick
- Use trade charts for better understanding of the stocks including the overall market
- Finally, stay strict to your plan
1. Pick stocks on the basis of your personality
Your personality will play a bigger role in trading the type of stocks that you invest in. For instance, suppose you are a 26 year old who grew up playing computer games, have a sharp and fast paced mind that can manage loads, yet stay focused on the aim, then short-term stock trading is perfect for you.
Conversely, if you are a 60 year adult who is more likely to think about the future consequences prior to taking a decision, and just wish to earn a little more by investing a little amount per month, then low volatility stocks trading might be suitable for you.
2. Consider risk management while picking the stocks
Before proceeding to picking a stock, decide what degree of risk you can survive. Make sure to develop a strong stock picking strategy that can help you avoid possible risks and preserve capital. The ultimate purpose behind all these is to secure your capital. So, don’t give up in the middle of the game. Stick to it to let your money take care of itself.
3. Learn how experts pick stocks
There are different categories of stocks to trade in terms of price, volatility, volume, and other characteristics. Begin with minimal risk. Then with time and experience, you will develop more ideas and skills to increase the success rate. Plus, you will be better prepared to accept risks related to your already picked stocks.
Note: Avoid the mistake of directly getting started with trading stocks and watch how far it goes. Before picking a stock, you must do the necessary calculations and analysis to conduct a secure trade backed by worthwhile decisions. Planning is always important to effortlessly proceed towards your business growth.
4. Keep the process simple, start with picking one stock to invest in
Begin with one stock pick. No matter what procedure you follow to pick stock over long-term, start the trade with one stock first. Analyze and study that stock thoroughly. Every stock is different from each other in terms of characteristics.
You must have a clear idea regarding the respective stock personality to decide your next move. Focus on the trade charts on a daily, intraday or weekly basis. Once you have proceeded to the next step of “learning curve”, start with the stock which you have thoroughly analyzed. This way, you will be on the safer side to avoid stock risks.
5. Pick Stocks that achieve your Investment goals
Never modify your trading criteria while day trading but when the market is out of business for the day. Stay consistent with your plan. Changing the criteria at the time of trading will be the last thing you would do to cheat yourself. Else, it will result in a general discipline breakdown.
Learn from Past Recessions
1. Roosevelt Recession
The recession lasted for about 13 months from May 1937 to June 1938. It saw a decline of 3.4% in the gross domestic product (GDP) of America then. The rate of unemployment was nearly 19.1% (approximately 4 millions of unemployeds).
Reason behind the recession: A stock market crash in early 1937, where businesses and the government blamed each other on grounds of “New Deal” and “capital strike” respectively. The downfall of the stock market pulled out about $2 billion from circulation to ensure the Social Security insurance at that time.
2. Union Recession
It lasted for 9 months from February 1945 to October 1945 with a GDP decline of about 1.9% of Europe.
Reasons behind the recession: It was at the end of World War II, when military force demobilization began, and the period was slowly entering into the era of civilian production. During this period, artillery production was stopped and veterans started to re-transit into the workforce. It was the period when all the union started restoring themselves.
3. Iran/Energy Crisis Recession
The Iran recession lasted for 16 months from July 1981 to November 1982 with a minimum GDP cut of 3.6%. The rate of unemployment reached 10.8%.
Reason behind the recession: The change in the Iran government was responsible for their lengthy period of recession. Iran being the second largest leading producer of oil in the world increased the price of oil at lower volumes. This compelled the US government, supporter of Iran’s previous regime, to enact tighter financial policy to drop-down the inflation, which carried over from the past two energy and oil crises.
Well, there are several other testimonials of past recessions. But, unlike the current Coronavirus induced recession, the pasts were man-made, stock decline. So, it’s high time to decide wisely while picking a stock that can turn effective for the long term to compensate for the current crisis.