Why and How To Pick Stock Market Leaders???

In order to maximize your stock profolio return in a good up market like today, it is necessarily important to pick the right stock market leaders. Stock market will give you higher return if the market is in a up trend. It will outrun other stocks in the same industry group. It will have a higher beta than other typical stocks because of its performance.

The market leader concept can be applied to many walks of our life. For example, in professional sports, do you want Joe Montana for your football team or John Doe (an average football quarter)? Or do you want Michael Jordan for your basketball team or John Doe (another average basketball player? Of course, the best player will command a premium because they are best in their field. If you have average players, you may not get to the championship for your team, so your team revenue will be less. On the other hand, Joe Montana will get your team to championship, and he will make your other players better.

Like stock market leaders in the stock market, these stocks do command a high PE because they are the best. (GOOG) is one of the example, it is premium search engine in the world. (ISRG) is another example of the stock market leader because its dominance in the robotic medical devices.

Now we know why we want stock market leader, but the question is how can we pick them?
(MSFT) and (CSCO) were some of the stock market leaders in the early 90's. (MSFT) is hot because PC just started in the mainstream. (CSCO) was also hot because most companies want to link your PCs today within their compnaies. (JDSU) was the leader in the optical field in the late 90's. They are no longer stock market leaders in today's up market. Why? Many investors are still asking.

(MSFT) and (CSCO) are too big now. Many talents from the comapnies left to other more innovative companies like (GOOG) and other startups. In the case of (JDSU), market demand has saturated, and price has dropped, (JDSU) no longer commands premium for its products. Therefore, these stocks can not performed in a good market like today. If history is any guide, each up market will have new leaders, who would have heard of (GOOG) in the early 90's. But today, everybody uses it.

Stock Market Leaders will usually follow a few principles:
1. Product in hot demand which commands a premium
2. Revenue and earning increase in a faster pace from quarter to quarter because of its products.
3. Its stocks are in strong demand by instititions (if no big money support, stock can not go up)

To bridge the gap of finding leaders in the up market, this blog will try to guide my readers to find the future market leaders in the up market.