Stock picking is a very complex process and investors have different approaches. However, you should follow the general instructions to minimize the risk of investment. This article will explain the basic steps for stock picking performance.

Step 1. Decide the time and the general investment strategy. This step is very important because it will dictate the type of stocks to buy.

Suppose you decide to be a long term investor, you want to find stocks that have sustainable competitive advantages along with stable growth. The key to finding these stocks is to look at the historical performance of each stock over the past decades and do a simple SWOT (Strength-weakness-opportunities-threats) analysis on the company.

If you decide to be a short-term investor, you want to join one of the following strategies:

Investing in conservative blue chip stocks may not have the charm of a hot high-tech investment, but can be very rewarding, however, as good quality stocks have outperformed other investment classes over the long term.

Historically, investment in shares has generated a return, over time, between 11 and 15 per cent a year depending on how aggressive you are. Stocks overcome other investments since they incur more risk. Stock investors are at the bottom of the corporate “food chain”. First, firms must pay their employees and suppliers. Then they pay their obligations. After it is preferred shareholders. Companies are required to pay all the actors first, and if there was the money paid to shareholders through dividends or undistributed. Sometimes there’s a lot of money left for shareholders and in other cases there is not. Thus, investment in shares is risky, because investors do not know exactly what they are to receive for their investment.

A lot of opinions had been thrown on the benefits of growth than the investment value investing. Proponents of each style of investing insists that their method is superior to others.

I believe that each has its own merits. Being a proponent of value investing, let me state the case of a value investment. First, the value of investors to buy companies in a mature industry. That said, it is easier to predict a win for those companies. This is why I lean towards the value of investment. I am rather in favor of reducing the risk of chasing returns. Anyone can make an estimate that a small biotech company to rake in X profit after several years. But, if your prediction is not accurate, then how do you determine the fair value of ordinary shares? Your evaluation will be to Whack. Sickness comes and goes. Technology & fades fames. May defy common sense for some, but I prefer a low or no growth in the sector.