When it comes to picking individual stocks there are many challenges investors face. There are so many aspects to consider when you pick individual stocks, that it might seem overwhelming at first. You have to understand that picking stocks, requires deep knowledge about markets, industries, and the overall economy. This can take some time to perfect your approach and strategy to be able to succeed. As you make common investment mistakes you should try to continuously correct them, and incorporate what you learn in your strategy.
The best idea for beginners looking to start picking stocks is to start small. Start with a small number of stocks, in companies that you already know. Maybe you have used their products or services, or you already worked in one of these companies. That can help you understand the stock, and the company behind it a lot better. Focusing on a handful of companies can be the best step because you can deeply research them one by one. As you get more experienced and knowledgeable you can then increase the number of companies you are researching.
Starting with what you already know is another great piece of advice. Some of us have lots of experience and knowledge in a certain industry. Use that to your advantage. By focusing on companies that are in industries, where you have work experience can be a great advantage. This allows you to understand them much better, and have a more complete picture of what the market in that industry is like. You can easily tell what are the advantages and disadvantages of a particular company, with respect to their competitors. If you are knowledgeable about an industry, most likely you will be able to know how to value a stock.
Another important component of this is to do research individually. Some people often borrow ideas from other investors. They end up investing in companies because XYZ has also invested. This is not the best way to do it. You will find that if the investment thesis does not play out the way you were expecting, you can find yourself blaming other people for your failures. Blaming other people for our own investment mistakes is something you should avoid doing at all costs. This is because you will most likely make the same mistake going forward.