Investing can be easy by copying others whom you feel are excellent to emulate. Although that might work if you are indeed following an excellent investor but copying others does cause your level of anxiety to skyrocket when things go south. That is why as investors, we should learn how to spot stocks, set targets, and invest on our own to ensure that we can invest sustainably. In today’s post, I will be sharing a shortcut on how to spot stocks on your own to search for value and potential upsides.

Stay away from popular stocks (when investing)

Popular stocks are usually hyped up by the media and often the rally is caused by overwhelming excitement and greed rather than the actual value of the stock. Say, for example, some stocks have a PE ratio above 100 and that means the company needs more than 100 years to earn profits equivalent to the market capitalization of its stocks. That is completely absurd and the fact that it can exist is conclusive proof that many investors are motivated by greed rather than the actual value. Whether you have made money from such stocks, bear in mind that it will not contribute positively to your investing journey if you are planning to invest in the long run. As such, it is best to stay away from popular stocks and stick to stocks that are under-rated by the media.

Value can be found where there is overwhelming negativity

Let’s face it, humans are bias and easily influenced. When stock prices start descending, the company will immediately be subjected to loads of negative comments. Such sentiments usually lead to a downtrend of the stock but if you study the company objectively, you will realize that the comments made and sentiments are vastly exaggerated. Also, look out for sudden dips and prolonged downtrends when investing to spot for potential discounts caused by illogical market sentiments for a bargain. In short, instead of chasing stocks when they are on the rise, pay more attention to stocks that are beaten down. Likewise when greed rallies might lead to overbought territories, exaggerated and pessimistic news items might also lead to oversold situations.

Walk the talk yourself by buying low selling high

Investing is not for everyone. In fact, many people find it extremely hard to buy when the market or stock counter price dips. This is extremely counterintuitive as the stock should be more attractive to investors at a discount but usually, people are more willing to buy during an upturn. Such illogical sentiments are caused by the fear of making even more paper losses but do consider the downsides of buying during an upturn as well as you are paying more for less and getting lower dividend yields. Thus, my honest advice to investors is to always look out for opportunities when prices were lower than they were during their “glory days”, this will certainly increase their potential upsides and yields for a more sustainable investment journey.

Closing thoughts

Being a contrarian investor might be difficult because you are basically “alone” when the whole world is crowding around those few overhyped counters that are rallying aggressively. However, it is also wiser for you to stay sane and objective when investing because the way we deploy capital will eventually reflect in our portfolio performance. Do not fall prey to popular stocks and forget all other opportunities to buy or accumulate oversold counters.