So what is the best beginner stock market investing strategy for investing your money? In order to really make money from the market, you need to do several things. First of all, you need to decide which investing strategy you want to adhere to.
There are basically two schools of thought in stock market investing today. The first is technical analysis; the second is value investing. Technical analysis involves studying the stock charts of a company, identifying patterns, and making investment decisions accordingly.
For instance, you might look at a company and see that it’s stock price been going up for the last two weeks. Instead of looking at how profitable the company really is, and whether or not there is any substance behind the rising stock prices, you simply buy because you want to ride it out until it peaks.
The hard part is to determine when a stock price has peaked out, and the best time to sell. Many investors do make some good money with this method. However, the potential gains are slim compared to the risk of losing.
It is very difficult to determine when a stock will go up or down, especially short term. Also, if you do manage to swing a profit, the money you spend from all the transactions very often can eat the entire profit you’ve made.
The other option is value investing. This entails looking that the companies financial statements, determining its overall health, and investing when the market has undervalued it. If the company is profitable and the market has undervalued it the point where it would be a good buy, then you pull the trigger.
Of course, this method does not offer the short term growth potential that technical analysis does. Value investing is a longer term strategy. It is worth noting that the world’s top investor, Warren Buffet, is a value investor.
The bottom line: if you really want to make some big money with the market, then value investing is the way to go. No, it doesn’t offer the short term profitably opportunities that technical analysis does, but if you take your time, are patient, then you will make a lot of money in the market.
The most important thing is to make sure that you can read a financial statement and determine a companies’ overall profitability. Without being able to do this, you will have to rely on what the analysis are saying, and most times they are very short term focused in their recommendations. Follow these beginner stock market investing tips and watch yourself get rich with the market.