Stock Investing For Dummies®, 3rd Edition

Chapter 22. Ten Ways to Profit before the Crowd Does

In This Chapter

• Noting good reports from the media and stock analysts

• Looking at higher earnings

• Observing industries, megatrends, and politics

• Checking in on insider buying and institutional investing

If you find a stock that has all ten points listed in this chapter going for it, back up the truck and load up! Don't forget to tell me about it! Well . . . you don't need all ten of these points to give you the flashing buy signal, but the more, the better.

Use Your Instincts

Look at the world around you. Remember that you're a daily participant in the economy. Your savvy consumer instincts tell you much about what goods and services are great . . . or not so great. What do you like? What products do you see flying off the shelves? Do you see anything that throngs of fellow consumers are lining around the block to buy? One of the greatest investors of our time, Peter Lynch, used to go with his wife to various stores and consumer outlets. He watched how consumers responded to what was offered. Whatever he found that was popular became a subject of research, which lead to great stock picks for the Fidelity Magellan Fund, a stock mutual fund that he managed very successfully for years.

Take Notice of Praise from Consumer Groups

A company is only as good as the profit it generates, and the profit it generates is only as good as the revenues it generates. The revenues are based on whether customers are accepting (and shelling out money for) ...