How to Create a Stocks Watchlist

Today we are going to talk about how to create a stocks watchlist. It’s nothing complicated, it’s completely free and anyone can do it, even total beginners.

What is a Watchlist

Simply said a watchlist is a list of stocks that you want to keep an eye on, but don’t want to invest in them straight away. By placing them on a watchlist you can track their price, their earning reports and any news around the companies.

Why Do You Need a Watchlist

Some people might say that a watchlist is a waste of time or whatever, but every serious investor should have one.

It allows you to track all the companies that you are interested in and keeps everything much more organised. After all there are thousands and thousands of stocks out there, you can’t just track all of them every day.

That is where the watchlist comes in play. The trick is to only add stocks that you are interested in, but you are waiting for a better price or time to invest in them.

Tools You Need

Most brokers usually have the option to place stocks on a watchlist. But I am using a bit of a different method that I find gives me more information.

I use Seeking Alpha to create my watchlists for a couple of reasons. It gives a lot of information about the stocks in there, it shows all the daily news around the stocks and is also really good for showing earning reports and dividend news.

It shows you anytime a company declares a dividend, increase it’s dividend or any news around that stock.

I use their portfolio tool to create my watchlists. It is completely free and provides me with all the necessary information that I need around the companies that I am tracking.

For example I have 5 different model portfolios there that I use as a watchlist. I have one for dividend companies, one for dividend growth tech companies, one for REITs, one for ETFs and one for my own portfolio.

When I want to check the news in a given day I go around those portfolios and see how things are going. It shows me the current price, the latest news and some basic metrics around the stocks in there.

I just want to point out that I am not affiliated with Seeking Alpha in any way, I just find the tool very useful and wanted to share it with you. There are also other similar tools that you can use like Morningstar, Yahoo Finance or others.

How to Pick The Right Stocks

After creating the watchlist it is easy to get lost and just start adding any company that you see out there. But that is only going to cause confusion.

What I recommend you doing is only adding companies that you are familiar with and understand how their business works.

Here is a guide I have made on How to Research Stocks. It is on dividend stocks, but it works for any company.

After a given stock/ETF passes your research you can go ahead and add it to your list. The current price of the stock doesn’t matter, because you are only adding it to monitor it closer.

You can place a target on a given stock, place it on your watchlist and wait for it to go down to the given price. And to be clear the stock price is not the only thing you can place as a target. It might be dividend yield, it might be payout ratio, it might be debt levels or anything else.

For example a stock might seem like a good value, but to have huge debt levels. In this situation I would place a target regarding the debt levels rather than the price.

Another example is that a stock might have a great dividend yield, but a huge payout ratio. In that situation I would place a target on the payout ratio rather than the yield. Hope you get my point.

Watchlist Mistakes

There a couple of mistakes that people make when creating a watchlist. Let’s go through some of them.

Using analyst price targets

This is a common approach for beginner investors. They follow analyst price targets and think that they are always right. The most important thing is to add the stocks that YOU believe in and not the ones that analysts are pointing out as good or bad.

You can often see stocks with huge price targets and think that they are a good deal or vice-versa. The problem is that analysts can change their price targets all the time and don’t have much accountability. For example all the semi stocks had huge price targets at their all-time highs.

Then they had a very low price targets at their recent lows. If you had followed the analysts in that situation you would have bought them at the top of their valuations and sold at the bottom.

This goes for every industry really, but this is the most recent example that I came across. In fact I actually use them for reverse psychology.

When their price targets are high that means that the sentiment is at it’s peak and the stocks are likely to go down. There are of course always exceptions, but the lesson you need to learn is to only trust yourself regarding investing decisions. After all that are your own hard-earned money that you are investing.

Having a huge watchlist

Another common mistake is to have way too much companies on your watchlist. Even the biggest hedge fund managers in the world cannot track hundreds of companies at once.

My suggestion to you is to only add companies that you know well and have an interest in opening a position at some time in the future. Having too much stocks in your watchlist is going to cause confusion and make you do mistakes.

Having companies that are not part of your strategy.

If you have started investing chances are that you probably have some kind of a strategy. If you don’t here is a guide on Investing Strategies that might be useful to you.

I have said it before, but it is very important to stick to your strategy in order to complete your goals in the stock market. Goals for everyone are different and that is why there are different kinds of strategies.

In order to stick to your own it is a good idea to only have stocks/ETFs in your watchlist that are part of your strategy. Otherwise you are only risking of getting confused and adding stocks that do not match your long-term goals.

Conclusion

As you can see there is nothing complicated in creating a watchlist. Pick some companies that you like and match your goals, set a target, keep it simple and make your own decisions.

Thank you all for reading, hope you found it useful and can now create you own watchlist. Don’t forget to subscribe if you want to keep up to date with recent posts.