Fishing for Stock Picks is how I describe my stock investment research process. The analogy is a bit cheesy. But bear with me.
Because there are a number of reasons looking for stock investments is like fishing. Do you want to know why?
Well, to be honest, researching stock picks and going fishing have a lot in common. Seriously!
Because in both cases…
You’re going to be doing a lot of sitting around without much result. If you want to fish you need to have lots of patience. And the same goes for diligent stock investment research.
If you still don’t believe me, here are a couple of more specific examples…
Fishing for Stock Picks with Nets
I’m a big fan of using free online stock screeners to speed up your investment research. Of course stock screeners aren’t perfect (they’re constrained by GAAP and can only focus on statistics not management commentary).
And in terms of fishing for stock picks…
Researching stock ideas using stock screeners is a lot like fishing with big nets. You put the nets (or stock screens) out in the ocean and you periodically check in to see what comes up.
By putting fishing nets in your favourite spots (or screening for your favourite investment criteria) you have a standing tool to help you see who’s passing through that part of the ocean.
It’s working for you. And you can check in whenever you like. This is especially true when you save your favourite stock screens on sites like finviz.com and check in on them regularly.
But there are other ways to fish for stock picks too…
Fishing for Stock Picks with a Spear Gun:
Sometimes, you see a specific stock investing opportunity and you need to act immediately. Maybe it’s a new IPO, a stock idea that has gotten oversold or it’s just a new stock pick you really want to get a piece of.
In this case, researching stock ideas is kind of like fishing with a spear gun or harpoon. You are out and about cruising the seas for fish (or reading your favourite value investing blogs for ideas) when something catches you eye. You zoom in on the one fish of interest and nail it down as fast as you can.
You’re totally focused on one meaty idea and you do everything you can to get a piece of it as fast as you can.
Fishing for Stock Picks with a Rod:
You pick an investment publication, read it quietly, and see what bites.
The best part of this kind of stock research is…
You don’t have to get wet! And the whole process might even be relaxing.
Sure, fishing with a rod might not be the most effective approach. But it can work if you’re in the right place at the right time. And it doesn’t require any fancy tools.
If you’re just getting familiar with a new area of investment research (or a new body of water) this is an easy way to get acquainted. You might not get lucky with any bites but you’ll start to familiarize yourself with where you should lay your nets or aim your harpoon.
The key of course is to use the right lure and hang your line at just the right depth. Have a vague idea what you’re looking for and be open to possibilities. And be patient.
The whole fishing for stock picks analogy might be a little bit silly. But it pays to think seriously about the different ways you can research stock picks and analyze investment ideas. And if you can teach yourself to fish you’ll always have plenty of opportunity coming your way.
So be effective with your time and conscious of your methodologies. Make sure you’re researching your stock picks effectively – or you’re definitely going to go hungry.
And By The Way: If you’re looking for more investing ideas and tactics to improve your approach to the stock market I encourage you to download the free eBook below. You’ll also get free weekly updates with my favourite tools and tips to help you improve your investing and stock trading decisions.