To The Moon

Investing is not a simple matter. Faced with a huge number of stocks and a constantly changing economic environment, how can we choose stocks and track them?The significance of tracking is to focus on changes and discover differences.

It is not easyto studyeachstocks in depth. With limited energy, Tiger_Academy suggest you to focus on a few factors that have a greater impact on the company.

1. Macro environment

Before investing in a company, we need to understand the current macroeconomic situation first.For example, Fed rate hike. Due to the continuous inflation of the U.S. economy, the Fed insisted on raising interest rates, funds flowed out of the stock market, stock liquidity decreased, and market sentiment was pessimistic.In this case, the risk appetite of the market is reduced, and investors will prefer industries with low risk coefficients and abandon industries with high risk coefficients.As shown in the figure below, in 2022, the energy sector with a low risk factor had the highest rise, while the technology sector with a high risk factor fell severely.

Source: https://finviz.com/

Therefore, before investing, we can first understand the current macroeconomic situation and then determine to invest in which direction .

2. Industry

Any enterprise can not exist independently, it has upstream and downstream industrial chains, and competitors in the same industry.

Sometimes the changes do not come from the company itself, but from the changes in the industry, and there is nothing you can do about it.For example, before the real estate thunderstorm, property stocks rushed to the street. Tesla cut prices, and lithium battery stock prices rose. When Apple's stock price rises, investors want to find out who supplies Apple, and then find Luxshare Precision. Affected by the epidemic, Foxconn was unable to start work, and Apple's shipments were affected.

The tracking of the industry is mainly based on the prosperity, focusing on leaders or major competitors, or the overall situation of the industry. Such as start-up status, output, order data, sales data, inventory data and so on. It is much more convenient to have official or third-party statistical data. For example, the industry data module in Wind EDB can check the production and sales of various new energy vehicles in China, which is convenient for tracking the sales of new energy vehicles.

Whether the company is a leading stock in the industry is also very important.leading stock generally have high-quality performance, profit margins, and turnover. When they rise, they have a large increase and a fast rise, and when they fall, the decline is small. Therefore, after determining an industry, the best choice is to invest in leading stocks in the industry.

3. Stock prices

Changes in stock prices are the easiest areas for us to track. Some long-term investors may not like to pay attention to stock prices. This is actually not a big problem. Most of the time, stock price fluctuations are meaningless. But if there is a large fluctuation in stock price, there will definitely be a reminder in their news.

The most direct indication of the change in stock price is that there are relatively large funds that are bullish or bearish.The operation of major shareholders will also affect the stock price. For example, Musk’s sell-off of $Tesla Motors(TSLA)$ , Buffett’s reduction of $BYD Co., Ltd.(BYDDY)$ , Naspers’ reduction of $TENCENT(00700)$ , etc.

By @MillionaireTiger

4. Fundamental changes

Fundamental changes are mainly based on the tracking of operating conditions. 

The most common way for investors to understand the company's operating conditions. For changes in fundamentals, most institutions have a tracking model that includes the main data that needs to be tracked, such as performance, liabilities, cash flow, profitability, growth and other major financial indicators. Different companies may have different concerns.

For example, banks should pay attention to data such as provisions and bad debts, and those with heavy assets should pay attention to capital expenditures.

In order to gain the upper hand in the game, competent institutions will basically participate in corporate research.Research has the opportunity to examine the entire business model of the company, and may have a deeper understanding of the operation of the company or feel some differences and changes that are not usually felt.In addition, individual stock news is also an important sector. Although the news often lags behind the stock price trend, in most cases you can get a corresponding explanation to judge the subsequent impact.

For the tracking of changes in fundamentals, it is necessary to have a general idea of the basic situation of the companies.