Newbies to the stock market may often find that their picks do well for a couple months and then stall or reverse. It's common for many investors to merely analyze charts, search for trends, and study relevant economic data. However, while analysis has its purpose in the market, it can only take investors so far.
A good place to start is by learning the difference between a stock's short-term drivers and the factors which provide the possibility of long-term profits. Throughout society's fundamental changes, those who get in early and recognize the companies most likely to exploit those changes will come out winning, which ties in with the investment in new trends and technologies.
This is easier said than done, because many times short-lived fads at the peak of their popularity can appear to be fundamental changes, and often self-branded market experts would prefer safer, established, but ultimately less profitable companies, instead of change. It's even possible to pick a losing investment within a solid industry - such as MySpace instead of Facebook, or Ask Jeeves instead of Google.
A good tip right now is to seek out stocks able to derive long-term benefit from state and federal budget shortfalls. Due to the Covid-19 shutdowns, state revenues took a hard blow, and government spending across all levels reached massive proportions just to protect the lives of citizens. As a result, all levels of government have been burdened by huge debt.
As long as the temptation to spend more is avoided, that isn't necessarily a problem. However, it does lead to the search for other revenue sources, which is where players such as the gambling and cannabis industries enter the game.
Despite optimism regarding the marijuana industry, it isn't a profitable option right now, due to factors such as significant resistance to full federal legalization and the lack of clear power players within the industry.
However, gambling is now fully mainstream and able to offer quick and reliable revenue at all levels of government, leading to the legalization and taxation of the industry.
Not long ago, sports coverage contained few references to gambling. Now, the connection between sports watching and sports gambling is being openly acknowledged. Fox Sports and ESPN both have regular shows dedicated to betting analysis and news, and game previews also include the spread as relevant information.
This is inevitable when there are only two states left that haven't legalized sports betting or taken steps towards doing so. Before long, the federal government is likely to accept the reality and revoke the law banning online gaming. Then, industry regulation and taxation would follow, even more likely when we factor in the federal debt which is $27+ trillion and growing.
Recommending an industry due to its imminent taxation may seem peculiar, but big gambling firms will profit massively from the recognition boost provided by regulation and taxation. Two good picks right now are Caesars (CZR), who recently purchased bookmaker William Hill and will have access to experience dealing in a regulated, taxed market, and Draft Kings (DKNG) who have an early dominant position in U.S. sports betting.
We can expect to hear a lot about spending plans over the next few days, but little insight as to how they will be paid for. But eventually, it has to be done, and taxing new industries or products is always an appealing prospect to politicians. That gives sport betting the potential to become a massive growth industry with the pass of time, which is the type of long-term story stocks investors should be on the lookout for.