Learning More about Solid Investment Strategies

investmentThere’s an old saying that a trained monkey could do a better job than many actual investors do. A recent study conducted by a mathematician seemed to indicate that a portfolio of stocks randomly chosen off of an exchange list could outperform many people’s carefully crafted portfolios. This shouldn’t be taken as an encouragement to invest randomly, but rather it helps to illustrate how many people invest without having a solid strategy. Learning about investment tactics is important for anyone who has money invested in any kind of trading account.

Buy and Hold Investment

buy and hold

The most popular serious strategy is often referred to as the buy and hold style. This involves buying shares in a company and not selling them for a very long time. Some investors believe that market timing strategies simply don’t work, but it might be more accurate to say that they don’t work for small retail investors.

Equity markets offer decent returns over a long period of time, though investors are often discouraged by short-term dips in the market. Still, this strategy is considered the safest for many people as long as they buy stocks at the right price.

Past Performance Trading

Most people would agree that past performance isn’t an indication of future growth, but some people actually do select securities based on what they’ve done in the past. Those who are using this kind of strategy are encouraged to research other aspects of any fund that they decide to put money into.

Market Timing

markettiming

There are investors who try to make money in the market using strategies that are based more around mathematical price averages than the actual financial stability of companies. According to financial experts from the Online Trading Academy, it may be best to learn as much about the market as possible before ever using this kind of technique. New investors are best avoiding this kind of a method.

Contrarian and Value Investment Techniques

Certain people will take a look at the financial stability of companies that they feel have been oversold by other investors. This kind of bargain hunting often takes place during times of economic downturn. While some people feel that these techniques are extremely sophisticated, they’re actually fairly easy to understand.

Some very well known consumer businesses will drop in price during bear market period. Firms that have a durable competitive advantage will eventually regain much of their value, which helps to make these kinds of investors a good deal of money once the market rebounds.

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