If you are going to invest in the stock market, it is vitally important that you do adequate research to try and predict which stocks will rise and which will fall. There are some clues that can help you make the appropriate determination, but these aren’t always easy to find. However, it is still possible. As such, here are four ways to predict market performance.
What is Market Performance?
Market performance is the direction of the stock market. In other words, is the stock market doing well, or is it doing poorly? Keep in mind that there are many different measures – or indexes – that determine the market’s success, and that these indexes don’t always move in the same direction. As such, gauging performance truly depends on what you are trying to measure.
- Economic Indicators: According to the stock market experts at Money Morning, “Leading economic indicators can tell you where an economy is headed and provide information so that investors can make stock predictions.” Economic indicators include things like the overall strength of the economy, unemployment rates, consumer confidence, and more. Some economic indicators are better than others, and some indicators may apply more to certain stock sectors than others.
- Fundamentals: The fundamentals of a stock include its basic metrics that can be objectively determined and are publicly available. This includes revenue projections, data on earnings, profit margins, stock price movement, overall stock momentum, and more. All of this can be found publicly on the internet and used to determine which stocks are performing well, which stocks are under-performing, and where you should invest your money.
- News: Keeping your eye on the news and current events can be a great way to determine whether or not a stock will move up or down. Remember, no stock exists in a vacuum, and keeping an eye on current events – such as wars, consumer trends, or political turmoil – can help you make an educated prediction about the success of a company. This can apply to major news, but it can also apply to smaller consumer trends, like a spike in video game system purchases.
- Comparative shopping: When you make a purchase of a major product, you probably compare the price of that product to other similar ones, right? Thanks to the internet and numerous retail stock purchasing apps, you can do the same for stocks that are located within the same industry. Compare the stocks and see which ones are doing well. This may give you some valuable insight of which stocks will continue to perform positively.
As the classic stock saying goes, past performance is no guarantee of future success. However, using past performance and other factors as a metric can help you determine what stocks may do well in the future.