With Stock Market Optimism Rising, 4 Tips To Consider Before Investing

With Stock Market Optimism Rising And Market Volatility Falling, 4 Tips To Consider Before Investing

stock market

The Dow Jones Industrial Average soared above 30,000 points for the first time just two weeks ago. That activity and other factors have sparked a more bullish outlook for U.S. stocks as a new year approaches.

Much of the optimism from stock experts is being fueled by forecasts of a potentially stronger U.S. economy in 2021. There are expectations COVID-19 vaccines will be on hand by early next year to battle the pandemic. Joe Biden’s win in the presidential election, low-interest rates, rising home prices, and the likelihood of Janet Yellen becoming the next Treasury secretary are also boosting confidence.

Though some economic risks such as slowing job growth remain, the overall outlook for brighter days ahead is the best it’s been since early this year pre-COVID. Now, a new report cites 10 stocks getting the largest number of hits from investors checking out those assets online. Interestingly, the report comes as  Federal Reserve Bank data shows just 14% of American families are directly invested in individual stocks, but 52% have some market investment, largely from owning retirement accounts like 401(k)s.

Though market unpredictability has no time frame, stocks are still seen as one of the most popular ways people invest their money. Observers contend that stocks typically outperform alternative types of investment over a long period of time. To learn what company stock Americans are most interested in investing in, online investing outlet Invezz.com analyzed data from online analytics tool Ahrefs.com. Some of the top findings include:

  • Tesla is the company Americans most want to invest in with 5,154,000 online searches per month for the electric vehicle and clean energy innovator’s stock. The firm has been added to the S&P 500.
  • Apple and Amazon ranked second and third for American investment,  respectively with 2,584,000 and 2,274,000 online searches monthly.
  • Nine out of the 10 in the top companies people desire to invest in are U.S. companies, something that is possibly not a big surprise.
  • Aerospace company Boeing landed the fourth spot with 2,014,000 online monthly searches.  Other companies ranked respectively in the fifth, sixth, seventh, and eighth spots were Disney, Advanced Micro Devices, Microsoft, and Facebook. On the lower end, Chinese automaker NIO ranked ninth and the Cambridge, Massachusetts-based biotech firm Moderna finished tenth.
  • Intriguingly, Tesla, Apple, and Amazon ranked among the top three even though their stocks perhaps are very costly for average investors. For instance, Amazon sells for just over $3,000 per share, while Tesla shares are price around $600 each.

With stocks being a key way to build personal wealth, Invezz.com surveyed 1,882 undecided Americans to find out what would push them over the ‘investment line.’ Some 72% reported obtaining more knowledge on an investment, 66% spoke of reducing non-essential expenses so there is more money available for investment, and 63% accepting there will be various ‘risks’ associated with investing. And 55% have stated help or guidance from an investment professional, while 31% reported being less deterred by negative stock market speculation.

Invezz.com offered some tips investors may do well to consider before investing in stocks.

Define your intentions

Ask yourself important questions before you invest like: why am I investing? and how much do I want to invest?

If you are simply looking to ‘play the market’ in search of a quick profit, then you should be wise not to take on too much risk – it’s recommended to step into the market with a view to invest for up to five years at the very least.

Investing in What You Know

You are more likely to be intuitive to what’s going on if you invest in companies that you have a genuine interest in. If you are aware of their operations, products, key personnel, and more, you will make more balanced decisions rather than reactive ones because you have a core understanding.

Even in cases where you don’t, companies regularly produce a wide variety of documents such as their mission statement, financial statements, and shareholder letters, all of which are detailed sources that you can use to educate yourself about a company, its performance, and the way it is run.

Don’t Panic

Adverse or unexpected news about a company or industry can have a huge impact on stock performance but do not be quick to act just because everyone else is. Stock investments can go up and down quickly, so carefully assess the situation before making any firm decisions.

Diversify Where Possible

As the age-old saying goes ‘don’t put all your eggs in one basket’. Diversify your stock investment portfolio as much as possible by investing in companies from different industries. This will greatly lower your exposure to risk when adverse market forces affect certain industries more so than others.