- Money Morning Australia

Picking Winning Stocks for Retirement

Written on 31 October 2013 by Kris Sayce

Picking Winning Stocks for Retirement

It’s day four of ‘Retirement Week’.

This afternoon your editor will sit down for a chat with retirement and superannuation expert Vern Gowdie, and Sound Money, Sound Investments editor Greg Canavan.

We’re broadcasting the discussion live. If you’ve registered for the event be sure to tune in to the conference call website in plenty of time.

The event starts at 2pm sharp.

So far this week we’ve looked at risk, asset allocation, and a simple way to set up an independent savings plan, starting with just one dollar per day.

In today’s Money Morning we’ll take things one step further. How to pick winning investments to make sure you have enough money to see you through retirement

If you want to know how many ways there are to pick stocks, the answer is, more than you can imagine.

Of course, not all of them produce winners. In fact there isn’t a system or methodology that produces a winner on every trade. But somewhere there probably is a system that produces a loser on every trade!

But before we get on to the subject of picking winning stocks, remember that this is part of your overall strategy. Before you get to this stage you need to go through the steps we’ve covered so far this week. You need to understand risks, allocate your asset exposure, and save so that you can invest.

Once you’ve done that then you can start thinking about how you’ll select each investment based on the risk, where it fits into your asset allocation, and how much of your savings you’ll use.

You Can’t Pick Stocks Like You Pick a Meal

Easy right? Not quite.

Picking winning stocks isn’t like ordering an entrée, main course and dessert from a menu.

If you buy and sell shares based on fundamental investing (meaning that you look at what the company does and its financials) you could be a value investor, a growth investor, a speculator, an income investor, or a contrarian investor.

Or you could be a combination of those…or a different type of fundamental investor entirely.

If you buy and sell shares based on technical analysis (meaning you look at price charts) there are 1,001 different methods. You may trade long or short – or both. Or you may base your trading on Fibonacci, Gann or Elliot Wave theories.

And that’s just naming a handful. There are many, many other ways to trade using technical analysis.

By now we may have put you completely off the idea of being an active and independent investor. That would be a shame. But if that’s your decision, that’s fine. Active investing isn’t for everyone (check out Vern Gowdie’s essay below).

But if you can stick with it and develop an approach that you’re comfortable with, you stand a good chance of becoming a successful investor.

So, is there one approach that’s better than others?

The easy answer would be to say that Warren Buffett’s style of value investing is the best approach. After all, he’s the world’s richest man.

But it’s not as straightforward as that. What suits one person may not suit another. Every investor has his or her own personality. Thousands of investors try to follow Buffett, but with mixed success.

You Don’t Have to Reinvent the Wheel, but You Can Change it

So quite often the best thing to do when saving and investing for retirement is to develop your own approach.

It doesn’t mean reinventing the wheel; you just get to alter it a bit. Odds are you’ll take a bit of something from a number of sources. For your blue-chip growth stocks you may look for value.

For your income portfolio you may look for earnings growth. Or if you want income stability, something like Nick Hubble’s ‘Security Ladder’ may fit the bill.

And for your small-cap punting stocks you’ll probably look for pure speculation…the stocks that can give you the biggest bang for your buck.

In short, as much as we’d like to tell you that there’s one secret winning formula, it wouldn’t be true. What’s most important is to think carefully about the criteria we’ve discussed this week and then adapt it to your own needs.

If you do that you’ll stand a great chance of avoiding some of the big investing pitfalls (such as over-exposing your asset base to one asset class) while still giving yourself the best possible chance to achieve your retirement goals.


From the Port Phillip Publishing Library

Special Report: Read This or Retire Poor

Join Money Morning on Google+

Already a subscriber to Money Morning... or simply, just like what you're reading? Then show your support and spread the word...
Share this post on...

Kris Sayce
Kris is never one to pull punches when discussing market developments and economic events that can affect your wealth. He’ll take anyone to task — banks, governments, big business — if he thinks they’re trying to pull a fast one with your money. Kris is also the investment director for Australian Small-Cap Investigator, Diggers and Drillers and Revolutionary Tech Investor. If you’d like to more about Kris’ financial world view and investing philosophy then join him on Google+. It's where he shares investment insight, commentary and ideas that he can't always fit into his regular Money Morning essays. Read more about Publisher and Investment Director Kris Sayce.

Leave a Comment

Letters will be edited for clarity, punctuation, spelling and length. Abusive or off-topic comments will not be posted. We will not post all comments.

If you would prefer to email the editor, you can do so by sending an email to moneymorning@moneymorning.com.au

FREE INVESTMENT REPORT: Why Dividend Stocks Are The Key To Retirement Wealth

In this report discover how dividend stocks can give you income long into retirement — even if stock prices don’t rise.

PLUS you'll get Money Morning every weekday...absolutely free.

Enter your email address below and hit the 'Claim My Free Report' button now.

Privacy Statement
We will collect and handle your personal information in accordance with our Privacy Policy.
You can cancel your subscription at any time

New Frontier Investor

The last investment megatrend birthed stock gains of 11,095%, 20,621% and 50,760% over 20 to 40 years.

If Kris Sayce is right, gains from this next megatrend won’t just reach those heights...

They’ll SURPASS them...

To see why, click here.

Iron ore leadgen

  • ^NDX3967.244+2.08 - +0.05%
  • ^FTSE6788.07-3.48 - -0.05%
  • ^AORD5563.400-6.500 - -0.12%
  • ^AXJO5569.500-7.900 - -0.14%
  • AUDUSD=X0.9413
  • USDJPY=X101.854

PAN [predict literally ban]

interest rates leadgen

Australian Small-Cap Investigator

Why Holden’s future lies
beneath the soil in

And not just the future of Holden…but Toyota,
Hyundai and Mazda too


investing success leadgen

TDR [war in the pacific ban]

Resource Sector leadgen

Gowdie Family Wealth

Which type of family are you?

  1. The kind that ends up in court
    battling over inheritance money…

  2. Or the kind that knows how to
    protect, pass on and grow wealth forever.

Click here if you want the kind of family
that grows its wealth for generations.

The Money For Life Letter

A giant wrecking ball is about to smash Australia’s retirement system to smithereens...
And unless you take the evasive action outlined in this Special Issue, everything you’ve saved and invested over your whole working life could soon be GROUND to DUST.
Click here to read.

Gold Stock leadgen

Revolutionary Tech Investor [BANNER moonshot]

Graphic Ad 1 – Blue Chip Stocks Report

More Recommended Reading Below...

The Pursuit of Happiness & The Daily Reckoning

  • The Pursuit of Happiness
  • The Daily Reckoning Australia

If you answer ‘yes’ to the following questions, then you’re hoarding your investments. Don’t despair [Read More...]

Most large super funds have limits on where they can invest superannuation. This means many investor [Read More...]

Russia and its supporters have nothing to gain from attacking civilians. Russia and Putin were winni [Read More...]

You owe it to yourself take this advice. But even if I’m right and you act now, you may not be able [Read More...]

New Zealand may not be an emerging market, but it’s highly leveraged to growth in emerging markets. [Read More...]

Just because governments and central banks around the world are trying desperately to levitate world [Read More...]

Perhaps soon, perhaps not — the US stock market will have one of its worst days. Bear markets and ma [Read More...]

China’s moves are as much about food security as they are national security. Whether its fish, fuel, [Read More...]

The real estate and credit bubble blew up in 2007. And now, prepare yourself for the biggest blowup [Read More...]

Australia’s financial industry is getting away with murder. Forcing people to put money into superan [Read More...]


"I think you're fantastic! I love to read what you write...you're so interesting and amusing and I've learned so much" -
Money Morning reader, Chris Gadd

"You guys are brilliant. I feel more relaxed about the future than ever simply because I know what is going on rather than floundering around with smoke screens and mirrors from the government and mainstream" -
Money Morning reader, Helen Carter

"Wow what can I say? I was an economically confused moron until I read your newsletter and even though I've been a subscriber for a short period I can now see how easy it is to understand, if you use common sense and can have the spin translated into everyday language. Thanks for an entertaining read." -
Money Morning reader, John

"Keep up the good independent and well thought out articles offering a view that often debunks mainstream myths." -
Money Morning reader, Craig

"I do admire your straight talking and simple analysis of the situation, I think of you as the Jeremy Clarkson of finance." -
Money Morning reader, Jeffery