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The Q.ai Team
March 17, 2021

What Is Stock Picking?

What Is Stock Picking?

Point blank: Stock picking is risky. No matter how well a company has performed in the past or how positive of a trajectory you predict for its future, there’s a lot of risk that comes with investing in individual stocks. And that’s precisely why you should invest in strategies, not stocks.

What is stock picking?

Stock picking refers to choosing stocks in which to individually invest your money. You can pick stocks based on your own personal interests or research.

Why is stock picking risky?

Let’s break this down. Here’s why you want to think twice before stock picking.

1. You’re probably late to the game.

By the time a company’s impressive quarterly earnings report or the details of its sinking ship make it to the general public, it’s likely that the stock value has already adjusted accordingly. The probability that large-scale investors have already made moves, tinkering with the market price, is high. The reality is that most individual investors are behind the curve when it comes to investing in or selling shares.

2. You’re not a psychic.

You are only human. You can’t predict the future. Despite the hours upon hours of research that you certainly can put into a company’s performance predictors, you have no way of truly knowing what’s going to happen. A pandemic could plague planet Earth (that doesn’t sound so crazy anymore, does it?). The economy may not keep up. The company could revolutionize its space—or it could totally veer off track and collapse at a moment’s notice.

Investing in individual stocks instead of in diversified strategies puts all of your eggs in one basket. While that basket could theoretically explode with gains, it could also explode altogether. Or, it could sit idly while you count opportunity losses of money you may have made had you invested elsewhere.

3. You don’t have time or resources.

Sure, we don’t know your schedule. But we can promise you that, if you’re like most investors out there, you do not have time to stock pick. We’re not talking about gambling on companies based on the news headline you saw on Facebook or from the banter you overhead at the office. We’re talking about spending dedicated time to actively keep abreast of earnings reports, SEC filings, stock charts and all that fun stuff. And, especially if you’re investing in several stocks, this can become like a full-time job.

Wall Street professionals use quantitative analysis and Big Data-backed models to help them identify undervalued stocks. Most retail investors do not have access to the same coveted resources as the experts.

Why investing in strategies is smarter...

Investing in strategies instead of individual stocks saves you time and money. Here’s why.

1. You won’t get emotionally attached.

When you stock pick, you spend a lot of time getting to know a company well. It’s only human that you’ll start to really root for it—especially since you’ve invested in it. This can cause you to become emotionally attached to the company, which may cloud your judgment when it’s time to let go.

When you invest in strategies, however, you’re making moves based on the markets, not individual stocks. You don’t have to put in nearly as much time getting to know companies, and you’ll have an easier time keeping a bird’s-eye view on overall trends.

2. You won’t break the bank on fees.

Sure, there’s always the risk of losing money when you invest. But you spend a whole lot more money on commission costs and hidden management fees when you invest in individual stocks than you do when you invest in strategies. So you actually make out with more money by not dumping so much of it into brokerage charges.

3. You can maximize returns and minimize risks.

Portfolio diversification is key to managing risk while capitalizing on gains. Spreading your investments around in various types of assets covers different bases and limits your exposure to any one kind of asset. All of this can help to reduce the volatility of your portfolio over time. If some of your stocks plummet, for example, you’ll have others to help keep you afloat.

In fact, a burgeoning body of research suggests that, on average, well-diversified strategies generate more reliable returns than non-diversified strategies do over 25 years or more.

With Q.ai, you can invest in AI-powered, top-performing investing strategies we call kits—just like those Wall Street professionals—and you don’t have to waste any time or even spend a whole lot of money. You can invest in any of Q.ai’s core investment kits with just a $100 minimum, and let AI manage it all for you for a flat fee of just $10 per month.

Not sure what kit is best for you? Don’t worry. Q.ai will recommend one based on important factors like your risk tolerance. From there, the AI will even auto-adapt to changing conditions, so you don’t have to sweat market swings.

Stop stock picking. Start investing smarter with Q.ai.

Q.ai is the trade name of Quantalytics Holdings, LLC. Q.ai, LLC is a wholly-owned subsidiary of Quantalytics Holdings, LLC ("Quantalytics"). Quantalytics offers automated financial advice tools through Quantalytics Investment Advisors, LLC ("QAI"), an SEC-registered investment advisor. QIA’s investment advisory services are ONLY available only to residents of the United States. Disclosures concerning QIA’s investment advisory services are available on its Form ADV filed with the SEC. The content in this newsletter is for informational purposes only and does not constitute a comprehensive description of Q.ai's investment advisory services.

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