Major Types of Stock Market Investment Strategies
With the recent advancements in technology, it is now easier than ever to invest in the stock market and also in gaining the best discount broker in Malaysia. But, how do you actually become successful in the field? Here are some investment strategies that you need to know.
1. It Starts with the Investment
The overall principle in stock trading is that you want to buy stocks or shares from a company who is going to be a stable entity in the industry. That is because you want to earn a steady income stream and so that you do not have to worry about anything else. Just invest and forget, at least, for the time being.
Warren Buffett actually encourages people to invest in a more stable organization. He posits that you want to look at a company and buy its stocks so that you will get some money in return later on.
When you’re going to invest, he said, always think of the long-term. Holding on to your shares will increase the interest and so, you’re going to earn more as years go by.
Philip Fisher, also a well-renowned investor, said that you need to follow a “three-year rule” in which after the said time period, you’re going to look at your stocks and assess if it is undervalued or not. If it is undervalued, you’re better off selling them. If they’re not, hold on it until the next three years.
2. Speculation is Crucial
The more seasoned stock traders always look at multiple factors and analysis to help them gauge if buying or selling stocks is good at this particular moment.
All of the information that they’ve gathered can be used to their advantage as some of the traders might not know of them. This perceived advantage of information is what is known as Speculation which is a term that was used by Phillip Caret.
Jesse Lauriston Livermore, also known as the “most fabulous living U.S. Stock Trader” is the founder of what is known as Technical Analysis.
Simply put, Technical Analysis is the forecasting of possible price movements in the market. Since we all know that it is definitely impossible to predict what is to come, you can still forecast how stock prices will move in the near future.
If you can tell that the prices of the stocks will increase, you can buy those stocks now and sell them later. Conversely, if the value of the shares is going to fall, sell them now while it is at its higher value.
3. What a Trader Actually Is
We know traders to be people who buy or sells stocks, but there is a little bit of difference between speculators and traders. Whereas the former predicts what the prices are going to be in the future, traders are anxiously looking at the trends now in the hopes of making a good deal.
There is this concept of day traders and they are usually the ones who do the majority of their trading during the day. These people are not looking for maximum profits; they are looking to make trades in the hopes of getting even a small amount of profits.
Why are there more day traders than any other traders out there can be attributed to unregulated day training firms that teach people the basics of stock trading and they’re also given some software to work with as well.
4. The Bogleheads
The term was actually coined by John Bogle, he states that the investors are never going to outperform each other because certain factors like operating expenses and portfolio transaction costs can cause a huge reduction in the total stock return.
What can we take away from all of this? It is that the stock market can be quite stressful, especially if you are looking to earn a lot more than your initial investment.
There is no perfect strategy out there; but what you can do is actually just piecing together some information from various financial gurus in the hopes of arriving at the best possible solution for you.