ETFs – Exchange Traded Funds – are funds that are traded just like stocks. You can buy or sell shares of an ETF throughout the trading day, as the ETF’s price goes up and down.

The prices for ETFs rise and fall due to the rise and fall of the prices of the individual stocks held by the ETF.  

Why should you buy shares of an ETF?  

ETFs focus on a specific set of stocks, such as tech stocks, automobile stocks, financial stocks, and even Indexes, such as the S&P 500. If you think all the stocks that are held by an ETF are generally going to rise in price, buying shares of an ETF makes it unnecessary to focus on individual stocks.

But for the serious investor, focusing on individual stocks, looking for the best performers, and achieving the highest possible rate of growth from your investments is the whole objective.  

Being a successful investor at the highest level puts your goals beyond what ETFs, mutual funds, and financial advisors can offer.  Being a successful investor means you are willing to listen to their suggestions, recommendations, and advice, but ultimately you must (prefer to) make your own choices.  Sometimes that will mean ignoring those recommendations, and make your own decisions – which, especially when you are just starting out, can easily turn out to be the wrong decision on occasion.  

The wrong decisions never entirely cease to occur; the choices that are profitable must be so to a greater degree than the losses, and should be increasingly so over time, as you continue to learn.  But be warned:  the criteria change over time.  There is no one magic formula.  Your strategy will become less effective as the markets change; you must be ready and willing to re-learn what works and incorporate that into your strategy.  Investing is a never-ending challenge.

Picking the highest performance stocks is difficult.  By definition, they do not follow the general trend.  They go up at a higher rate than the average (i.e., the S&P 500), but some days they will drop, even though the market generally went up.  

High performers must, over time, do better than the average, and must even do better than a comparable ETF.  

To find those stocks will typically require tracking potential high performers over time.  Different stocks perform differently at different times of the year.  Even once you have purchased your candidate stocks, tracking must be continued while you hold the stock.  Did they change their CEO?  Is the market for their products going up, or is it in decline?  

Using a spreadsheet is pretty much essential to tracking your stocks.  Keeping a daily record of the performance of your candidate stocks will tell you a lot about the trend each seems to be following, and perhaps when to sell some or buy more, as well.  And it should be a daily record.  Nuances are missed, if you skip days, or only record once a week.

Investing is not likely to be your day job, but for the serious investor who wants to succeed, and who wants to achieve higher rates of return, investing must be given enough time and attention from which to build success.

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