The start of a new year always brings about big dreams and big goals. Everyone has hope that the new year will be their year. They know though that they can't achieve their plans alone so many will turn to a stock advisor for help with their financial investments.
If you're the one that people turn to for advice here are some investing ideas that every stock advisor should know.
Recent Numbers Matter
For years the thinking that was drilled into a stock advisor from a young age was to study history. To look to the past, study the patterns, and only then consider investment options.
Well...there's a new school of thought that says that recent performance might be the only numbers that matter. This doesn't mean that the traditional way is wrong. It just means that the numbers a company put up recently can be argued to be more relevant than the numbers from forty years ago.
The key is to make use of those numbers to back up a decision to invest in Company A because those numbers represent the potential for a solid future performance. And not to use those numbers to justify picking up the "Hot Stock" at that moment in time.
The market is ever-changing and the world is in flux constantly. Why should a portfolio be different?
Too many investors consider their investments once or maybe twice a year. While you don't want to be reactionary to every fluctuation, being proactive can be a good thing. Stock advisors have a responsibility to hold up that second half of their title and advise.
A good stock advisor will offer that advice when it's not sought out yet it's warranted. Most investors know to be truly successful they need the steady, guiding hand of a professional.
Adapting a Different View
We just discussed being more fluid with an investor's portfolio. It's also important that a stock advisor be adaptable to the changing times.
There are some stock advisors who are traditional to a fault with their investment strategies. Those advisors have such a strong belief in a particular industry that they become almost blind to the fact that there are other options available.
Yes, legacy industries can still provide a solid return on an investment. But pursuing that track only means that emerging industries are passing you by. In a word, stock advisors have to learn how to adapt.
Know When It's Over
Letting go is never easy, especially when you've lost someone money. Stock advisors can't let emotion or pride play into their decisions on when to buy or when to suggest selling.
Sometimes, despite all best intentions, all the solid research, and all of the experience one has, a dud is just a dud. Don't get stuck in the "One more day..." routine of watching a stock make money vanish.
It's easy to hear about the billions of dollars some companies are making and think that there is money there for the taking. That's not always the case.
In fact, according to Investopedia "From 1926 to 2001, small-cap stocks in the U.S. returned an average of 12.27% while the Standard & Poor's 500 Index (S&P 500) returned 10.53%."
So sometimes, thinking small can pay off big.
Let's take a look at a couple of industries that stock advisors may want to focus on in the coming year.
Defense Wins Games
That old sports adage also holds true in today's market as well.
In the geopolitical climate we find ourselves in currently, defense industries are a solid investment option. A stock advisor should be familiar with not just those companies that manufacture large items like tanks and planes, but also many of the smaller shops who make more of the day-to-day operational materials used in the defense industry.
According to Forbes, "The aerospace and defense industry, +27%, has outperformed the S&P 500, +20%, in 2017..."
Put Your Money Where The Money Is
Under the Trump administration, banking institutions have started to see a change in the regulations that governed since the financial crisis. There is anticipation that these rules will continue to slacken, giving banks the opportunity to be more aggressive.
If this expected pattern holds true, it will be important for stock advisors to be aware of the opportunities that a bank stock could provide along with the potential risks it may bring with it.
Don't Let Potential Profits Go Up In Smoke
One of the fastest growing industries would have investors of the past shaking their heads - marijuana. While not legal everywhere yet, this is quickly becoming an accepted business.
What does this mean for investors? While the full benefits are unknown, it represents potential and an opportunity for change.
Medical and legal marijuana is an ideal example of an industry that for many would still seem to be too "dangerous" to invest in. Is it? That's where a stock advisor must weigh the potential of a client's tolerance to take a new step into once taboo waters.
Taking Stock of a Stock Advisor
If we're going to be honest, there's a lot of information readily available to investors. Anyone with a computer or a library card can do some "research" and create some investment strategies.
But it's important that people understand that just because they can access information, that doesn't mean that they're qualified to act on it. You can't really say that to someone though. At least not outright.
You can be professional and knowledgeable. You can listen and be collaborative. You can be respectful and inclusive. Presenting yourself as an indispensable asset can go along way towards creating a relationship that is beneficial to all parties for a number of years.
When you're ready to get deep into some financial data, let's talk.