What news an investor should follow in order to earn more

Reading the news is important not for the sake of immediate profit, but in order to understand the context, trends and find attractive sectors of the economy and promising companies. So it will turn out to understand what is happening and earn more.

What news to follow

It is better to read not everything in a row, but to systematically analyze the picture of the day.

About the world and countries

A good investor sees where the global economy and politics are going, and then turns the knowledge to their advantage. Global trends affect companies from many sectors and countries and often affect the value of stocks.

So, for several years now, they have been discussing everywhere decarbonization - reduction of carbon dioxide emissions. These considerations are affecting investors and, therefore, shares: green energy company NextEra has risen in priceNextEra Energy, Inc. (NEE). November 1, 2011 - November 1, 2021 / Yahoo Finance by 550% in 10 years, and the oil producer Exxon Mobil has fallen in price over the same time

Exxon Mobil Corporation (XOM). November 1, 2011 - November 1, 2021 / Yahoo Finance by 3%. An investor who noticed this trend even a year ago would have earned 20% on the rise in the value of securities.

Sometimes things are less obvious. For example, due to the lack of containers for transportation in the last year, it took off several timesPort Gridlock Stretches Supply Lines Thin in Blow for Economies / Bloomberg the price of transportation of goods by sea. On the one hand, carriers like Maersk made a lot of money: profits were five times higher than a year earlier. Sales and dividends immediately rose on expectations. On the other hand, sea carriers began to leaveUK air freight bookings soar as firms seek to bypass port backlogs / The Guardian individual customers who switched to shipping by cargo aircraft. As a result, shares of the same Maersk did not grow as well as they could. At the same time, the securities of air carriers were in no hurry to rise in price, because no one understood anything: quotations for stock market jumped back and forth.

It is best to study news from sources that have earned a reputation for years. As a rule, these are business publications: Bloomberg, Financial Times and The Wall Street Journal in English, Vedomosti, The Bell and Expert in Russian. You shouldn't trust only one source, even a very good one. However, business publications are a reason to take a closer look at the trend and look for alternative opinions.

Sectors of the economy

Majority investment portfolios includes companies from different sectors of the economy. It is important for an investor to follow sectoral news, as global trends affect different industries in different ways. So you can understand where everything is going, and assume which securities will rise and which ones will fall.

Let's say an investor invests part of his capital in shares of industrial companies. He will notice that at first they said on the newsGOP tax plan may kill electric car credit, but that won’t kill electric cars / The Verge, 2017 on the growth of car production and the development of renewable energy. Following this, began to appearMETALS - Shanghai base metals jump on Chinese demand, rising supply fears / Reuters, 2020 news about high demand for metals needed for such industries. Then, as expected, they took offSteel prices are up 200%. When will the bubble stop? / Fortune, 2021 prices, and with them the shares of companies that mine and process these metals. And then it came at allMiners' share prices gains evaporate as iron ore price slumps / The Financial Times, 2021volatility - sharp price fluctuations.

The media specifically set up the rubrics so that it is more convenient to follow specific industries: in one section they write about heavy industry, in another - about extractive companies, in the third - about car manufacturers.

With investment ideas

Business publications do not just publish news - they have a staff of people who conceptualize trends and relate them to the work of specific companies. Such specialists analyze events (for example, the publication financial statements) and formulate investment ideas. These are well-reasoned proposals to look closely at the shares of any company with the definition of a clear period in which it makes sense for an investor to buy or sell an asset.

Analysts provide information about the organization, talk about its history and technologies, and collect expert opinions. The latter explain how a particular event or management decision will affect the profit and prospects of the firm. As a result, the investor will be able to figure out what to do.

Things to keep in mind when studying the news

There are a few things to keep in mind.

Assets are not easy to pick

It used to be a full-time job: studying hundreds of pages of reports, subscribing newspapers, listening to stock market reports on the radio, sitting with a calculator and separating rumors from the truth.

In the world with the Internet, everything is simpler. There are many websites, analytics platforms and online reporting. Operational information is easy to find, all that remains is to discard all unnecessary. And what is needed is to save: financial statements, analyst consensus forecasts, multipliers and loyalty to your investment strategy.

Competing with traders is dangerous

Making trades based on news and rapidly changing quotes is not very correct. This is done by professional traderswho usually earnS. Feuerriegel, D. Neumann. Evaluation of news-based trading strategies / International Workshop on Enterprise Applications and Services in the Finance Industry either in the first second, or not at all. A private investor will not reach this speed and, most likely, will lose money.

Better to slowly and thoughtfully figure out how to balance risk and reward.

Diversification is useful

News analysis can tell you where to look for promising investment areas. However, it is more important that the investment portfolio meets the principles diversification: it should contain assets from different sectors of the economy, in different currencies and with a reasonable proportion of risk.

While it is possible to miss out on a few percent of profitability, the likelihood of making a profit will still be higher than that of the "rush", which will easily fall victim to speculation and volatility.