There are many very different philosophies and strategies that experts use to select stocks to achieve above average returns.
Growth Strategy 1: Buying Markets & Sectors
The first growth strategy will be on how to achieve the same returns as the whole US stock market or Singapore Stock market by buying the market indexes such as the
S&P 500 index, Dow Jones Index, Nasdaq composite Index and the Straits Times Index.
This is the most basic strategy that all novice investors should start off with. Executing this strategy successfully involves the lowest level of financial competence but can make you consistent annual compounded returns of 10%-12.08%.
Growth Strategy 2: Value Investing
Value investing is the strategy employed by Warren Buffett, the world's greatest investor and second richest man.
In value investing, you will buy high performing companies at a fraction of what they are worth.In other words, you buy great companies when they are undervalued and to sell them for a huge profit once the market realizes its true value. This strategy will consistently make profits of 15%-25% annually!
Growth Strategy 3: Momentum Investing
Momentum investing involves finding the hottest stocks that are ready to make great gains. Momentum stocks tend to already be priced above their fair value. However, because of the entire market's optimism about the stock's potential, these stocks tend to increase significantly in price within a very short period of time before they are overbought and come tumbling down (this is when you sell and make huge profits).
Growth Strategy 4: Options Trading
This strategy will show you how to make 100%-500% return on your money within 1-3 months.This final strategy requires you to have the highest level of financial competence and skill. This strategy is known as trading (as opposed to investing)
and it involves the use of buying (or selling) stock options.
Trading is different from investing in a few ways. Investing usually involves making money by buying a stock and predicting that it will increase in value over a few months to a few years. However, in trading you are able to make profits whether the stock price moves up or down and you usually enter and exit a trade within a very short period of time.
To your Success
Saturday, March 1, 2008
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