subject: 3 Stock Market Investment Strategies That Will Help You Make The Right Investments [print this page] The applied stock market investment strategy for each set of investment can vary. This is because each investment has its own set of factors to consider, its own profit goals and loss tolerance as well as its own acceptable risks. Thus, the following investment strategies can be applied on their own or in combination with the others, depending on the circumstances.
First, you can apply fundamental analysis, which is also called the value approach and best exemplified by Warren Buffett. Basically, you find the stocks of undervalued companies based on your analysis of their quantitative and qualitative properties like expected earnings, dividends, market niches and management competency.
The stocks are priced lower than their perceived value for many reasons. It can be that the run-of-the-mill analysts have overlooked their potential or that the market is temporarily not favorable to their growth. Whatever the reason for the low stock prices, you foresee that said values will increase sooner or later.
The second stock market investment strategy is technical analysis. To put it simply, you are using charts, graphs and other technical tools to predict the prices of stocks based on past trends, both in trading values and volumes. As you will observe, technical analysis is more suited to short-term trading activities than long-term investment plans.
Although technical analysis may not work well on its own where long-term investments are concerned, you can still use its techniques in conjunction with fundamental analysis. In this case, it is called Leeds analysis, yet another investment strategy that has served many successful investors very well.
Last but not least, you can use the buy-and-hold-the-market strategy. Basically, you are investing in all the 500 stocks that make up the S&P 500, which is possible if and when you invest in its index mutual fund.
Or if you have no intention or capability to invest in everything because of the risks and complications involved, you can always aim for a well-diversified portfolio. Just make sure that you can keep track of all of them and manage them well. Your investment portfolio will become bigger and bigger if, and only if, you know how to handle it.
Ultimately, the stock market investment strategy chosen can only be taken advantage of in the hands of a master. You can be provided with all the tips, advice and suggestions for successful stock market investments but if you cannot apply them, you will still be left behind.
