The answer is, of course, yes there are. However, the trick is identifying those opportunities.
To invoke the investment industry disclaimer that many people seem to have forgotten: “past performance is no guarantee of future results.”
Simply stated, what went up yesterday may not continue to go up and may lose value tomorrow. Exhibit A: the housing market.
However, you can improve your odds of finding winners (which may be defined these days as a stock that doesn’t lose as much as the broad market does).
How do you know where to start?
Morningstar.com provides some valuable information for free that you may want to consider.
The Web site has a tremendous amount of information and for this exercise, its tables on past performance are very helpful.
If you follow the link to Morningstar.com (open in a separate window or a new tab – right click for options), you will see a table that lets you choose several reports on past performance:
- Industry performance
- Sector performance
- Stock style performance
- Stock type performance
The table reports performance in increments ranging from five days to five years. You can sort the lists by clicking on a time period heading.
Using these tables and sorting the results, you can see how each category performed. I like to use the one-year measure since that is enough time to get a good reading and it covers the most recent past, which is most likely to resemble the upcoming future.
While you can compare components of the various reports, you can also compare the results to a similar chart covering the major stock indexes and many of the same categories as in the first table.
This valuable information will give you an idea of where to start your searches. Industries and stock sectors are the first step, followed by stock types and stock styles.
Once you have narrowed your search down, you can explore companies that fall in the areas that look most promising.
These tables alone will not identify specific winner, however they will help you narrow and focus your search – and that’s a good thing.
