One of the information that has been more discussed by novice investors in the stock market is how to choose a stock that will earn substantial profits. But this is the same knowledge that every skilled investor is reluctant to share, and each one has a different knowledge background, so even if you get a stock with good short-term returns from someone else, you don't know the best time to buy and sell, and you may end up having trouble meeting your expectations in terms of profits, or even losing money. Therefore this article summarizes the underlying ideas and logic of stock selection by investment professionals, as well as hopefully giving some insight to novice investors.

Selection criteria 1.

The company's ability to keep generating higher share prices each year, regardless of whether the stock market in general is going up or down. A quality company's stock is usually in an industry that is currently integral to the world's development process, or is heavily promoted by governments. Its stock price, with the help of constantly innovative products and various conglomerates and governments, is usually able to create higher stock prices when the stock market is generally rising, and to break through the highest point of the stock price during the decline when the stock market is generally falling. And there is no fear of buying this kind of company at the wrong time, because according to studies, the share price of a quality company, even if it is severely undervalued and below its own value during the overall stock market downturn, will be corrected by the market within 12 months and its share price will return to its normal level. This means that if you buy a quality stock and then the stock all experiences a downswing in price, then just waiting up to 12 months will give you objective profits while keeping your principal from losing money. Therefore the characteristics of this type of companies are that they can create higher share prices every year, as well as even if they fall, they can at least return to normal levels within 12 months, and this type of companies are suitable for regular holding.

Selection Criterion 2.

A company that can be run by fools is a good company. The difference between a company that is good for investing in its stock and one that is not is like the difference between a rich person and a poor person, whose way of talking and acting is completely different. If a company keeps emphasizing how it overcomes difficulties and how hard it makes money, its competitiveness in the market is limited and its profits are not stable from year to year. But if a company is more focused on how to have fun and eat well, but its stock price stays high every year, it proves that its profits are very sufficient to be able to expand its expenses in other areas every year. So these types of companies are characterized by a cash flow that must be very abundant, most of which are companies that have a certain monopoly in a certain field and have very ample annual interest.

Finally, according to the general description above, it can be found that good stock selection can greatly reduce investment risk, but in the end, each investor how to choose stocks, you can refer to the ideas of the investment experts above, and combined with their own actual situation, choose the stocks of the companies they are most sure of.

（Writer：Matti）