The challenge for many is knowing how to filter for the best stocks from the thousands available. The trap? Buying into brand names thinking that the company is a sure bet.
The correct approach is to:
- Look at this history of the performance. If it has done well in the past, it will likely do well in the future.
- Allow the stock price to set up for an optimal entry point. This will then put the odds in your favor for a repeat of its past solid performance.
And regardless of the brand name. Our primary objective is to make a profit, so the above approach will ensure you choose the best stocks for the portfolio.
Apple Inc. AAPL is a stock that is never too far away from some social media hype.
As investors, we must stay objective and decide solely based on our analysis. Charts are always the best way to do this as they are a source of truth based on the asset's price.
The Monthly Timeframe
Despite the 25% rise, Apple is still trading inside an area of consolidation. This means the price has every chance of remaining inside this sideways market, having risk tied up for no return.
Apple also does not have the smoothest history. It is a volatile stock that is prone to deep corrections.
I prefer to look for stocks with a smoother history and linear trends, allowing me opportunities to compound.
McKesson Corporation MCK, a stock I covered earlier in the week, is an example.
I am looking forward to how the rest of August pans out.
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