The stock market is indeed a dangerous place for beginners, which is why some investors choose the trusted advice of Wall Street professionals and advisors over their own intuition. For some, I do not doubt this is a sensible choice and worth the extra money that comes with employing a professional in the field.
However, by following a few simple rules, it is possible for the average investor to beat the professional at their own game. I don’t know about you but I would rather know what I am doing before handing over my money to anybody else.
There is no Substitute for Hard Work
The best way to beat the pros is to do your homework and plenty of it. While professional brokers often have to split their time meeting with customers and representing their business (usually at boozy client lunches), you can get ahead by researching as much as you can.
In fact, just by reading the annual reports of the companies you are interested in, you have probably done more research than the average Wall Street professional. Take your research a step further by listening to company conference calls (freely available on most company websites these days) and scanning company balance sheets for irregularities.
Focus on a Niche Area, Invest in what you know
A Wall Street broker is often disadvantaged by the fact that they cannot always choose the sectors they are most interested in. they may be tasked by their company to research all the companies in the oil space or all the pharmaceutical companies in the mid-west for example. Strict company hierarchies mean brokers sometime have to do jobs that they would rather not do.
You can take advantage of this by focusing on what you know. Maybe you have specialist knowledge of the auto industry or maybe you are excited about a new technology being developed by your own employer. By focusing on a niche area, which can be as small as one or two companies, you can gain a huge advantage and turn your own expertise into valuable information to play the markets with.
Look at Harnessing New Tools for Social Media
If we consider what exactly we are up against we can see that the average Wall Street professional is in their late 30s-50s, white collared, with a science or math degree form a good school. They may know a lot about biotech or Silicon Valley but there are certain areas such as popular culture where their knowledge is bound to fail.
By staying alert to the world around you, you can find investment opportunities in your everyday life that the Wall Street pros may likely miss. Products such as Apple’s iPod, Cross shoes and Nintendo’s Wii were all products than took a long time for Wall Street to latch on to. Even Apple was ignored for a time before it become the most popular stock on the planet.
If you have kids, keep an ear out to what they are interested in and keep your eyes open to what products are selling like hot cakes in your local shopping mall. Tap into social media, sites like Facebook and Twitter, which allow virtually anyone to be able to track trends and new developments, and you can be on your way to finding the next big investment. Look at ways to interpret data such as with Google Analytics or Twitter APIs.
This Article is taken from How to Beat Wall Street
Written by Arshad. A