This question is one that I see all the time on different groups and social media. This comes from people who have experienced a financial windfall and have decided to have that money work for them. Some don’t give any additional details about their current finances so it’s hard to determine if investing that money is the optimal move for them or not.
But let’s presume that the person’s financial situation is stable and they are not in financial distress personally. Then the move to invest is the right move but the question is wrong. Why do I say that it is the wrong question? Because a better question would be “HOW do I decide which stock to buy?”. That would be a much better question. It’s a better question because, unlike the first question, you’re looking to gain insight and knowledge about stocks so that YOU can decide which stock to buy.
The first question is asking for the answer to be handed to you, and thus, you end up following someone else’s agenda and strategy instead of your own. Remember the old saying. “Give a man a fish and they’ll eat for a day, teach a man to fish and they can eat for the rest of their life”. This applies even more with investing. It’s your money and it should work for you and not for someone else. What good does it do you if you get the investment information from someone else but you don’t know why you should buy that particular stock and how it fits into your own strategy? The first question precludes you even having a strategy.
But when you ask “How do I decide which stock to buy?” you’ll be able to hone your own skills and fine-tune your strategy. Because you’ll earn something you didn’t know before. If you already knew, you wouldn’t be asking the question. Before you can learn WHAT to buy, you need to learn HOW to buy. Before you can pick a stock to buy, you need to learn how to pick a stock. Basics.
If you don’t have an investment strategy the question “How do I decide which stock to buy?” will go a long way to help develop one by seeing what others are doing and determining which ones help meet your goals. The first question “What stock do I buy?” doesn’t do anything other than just spend you money without knowing why and is just a 1 shot deal.