When it comes to Roth IRA accounts there are so many options for where to put your money it could make your head spin. In addition you could read several books on what is the best option for doing the random walk strategy of investing. However, this article is going to be the art of trading stocks in your Roth account. For those that want to go with a self directed Roth IRA in real estate should go elsewhere.
So how do we select the stocks that will perform best in this retirement account? To me it comes down to 2 solid ways of investing. I’ll name them after the men that are most often referred to when talking about given styles. The first would be the “Warren Buffett” method. The premise here is to find great companies and buy their stocks when they are at attractive prices and hold them for the long term. In addition you need to focus on what you know, meaning don’t delve into the flavor of the month. The idea here being that even when beaten down by economics outside of their control or a bad stock market these companies have displayed that they are the leaders of their respective fields and will continue down that path. Make sure that you are very selective in what passes your filter for a great company.
The second method to note is the CANSLIM method forwarded by William O’Neil. His premise is 80% of stocks follow the market’s direction. So if you are in a bear market you are better off being in cash or being short than simply holding and waiting. On top of that follow large institutions and what they are buying. Buy great companies that are leaders in their industries and demand that they be near or at their all time highs. In other words, buy high sell much higher.
So there are a couple of solid methods for choosing stocks to make the best Roth IRA account that you possibly can. If you master this you could even delve into options at a later date.