Stock Market Investing – What Sectors Should You Buy Stocks In?

The stock market is a public market (“a loose network of economic transactions not a physical facility or discrete entity”) where businesses and individuals can do trades of company stock and derivatives at an agreed price; these are securities listed on a stock exchange as well as those only traded privately.

We will discuss openly traded securities on the stock market, and where a beginner should look to purchase a stock.

It is true (and has been tested and tested) that any 5 randomly picked stocks might do as well or even better than any 5 stocks that you spent hours doing research on. I used to overload my mind with information on stocks, that I thought I needed to know in order to make any smart investment.

My advice is this, if you are a professional stock broker, then get your head in every book possible. If you are like me, an individual who just wants to build a portfolio of stocks that increase in value, then you just have to play smart by a few rules.

First of all, look at the strong and weak recommendation sectors below, and you can see exactly what types of businesses you should lend your money, and which ones to stay away form.

Strong: Investment Banks and Brokerages; General Merchandisers; Specialty Stores; Apparel Retailers; Movies and Entertainment; Internet Software and Services; Auto Retailers.

Weak: Casinos and Gaming; Semiconductor Equipment; Managed Care; Oil and Gas Drillers; Coal and Consumable Fuel; Gold.

The following information of strong and weak sectors was provided from the Nasdaq website, and seems correct for the most part. I have to disagree that Gold is weak right now, because I find that it is something that will never lose value and is worth even more in bad economic times.

Finally, using the information above, find any company within that sector that you find respectable and profitable, do some simple background check, and you should be alright!

For example, for apparel retailers, I might consider purchasing stocks of Sears, K-Mart, WalMart, etc.