The 3 best methods for selecting stocks are momentum investing, value investing and insider stocks.
1. Momentum stocks
These are companies that lead the market in sales and earnings growth, product innovation, and price action. They usually rise faster in a bull market and fall sharper in a bear market or a correction.
2. Value stocks
These are companies that are cheaper than most on the basis of price-to-sales, price-to-earnings and price-to-book value. They often pay higher dividends too. These stocks tend to rise less in a bull market but hold up better in bear markets.
3. Insider stocks
These are the stocks when insiders (officers, directors and beneficial owners) are buying substantial amounts of their own companies’ shares with their own money at current market prices. These individuals have access to all sorts of material, confidential information about business prospects. These stocks usually outperform in good and bad times.
These are 3 different approaches that work over the long term but with entirely different metrics. Not one approach involves timing the market.