How Does an Investor Make Money in This Market

It is safe to assume that all first-time stock investors will be at a loss as to the what, when, why and how of the stock market. As such, you will want stock investing tips to follow in order to ensure success. Of course, nothing beats education for success as a stock investor but these tips should help.

The first rule of success, whether it is trading or investing in shares of stocks, is to buy low and sell high. Basically, you buy stocks that are on its downward trend but yet you foresee will rise in value in the future. Keep in mind that you will be holding on to the stocks in the long-term period, so knowing market trends and the factors that affect them is very important.

When the stock values have risen to your pre-set price, you might want to consider selling them. Do not wait for the stocks to rise any higher than your pre-set criterion as it may not do so but instead move in the opposite direction.

Yet another of the common stock investing tips is to choose the company with the best economics. Look at its financial statements, market share and other economic aspects before deciding to buy into the company.

If your analysis yields good economics but mediocre management, then it can be a good investment. In contrast, if your research points to bad economics but brilliant management, think two, even three, times before investing in the stock issuance. As they say, economics can and will override management competence 9 times out of 10.

Still, if the management component has been known to turn things around, you might want to reconsider. This is the exception to the rule, however, since past trends in the company have a way of repeating themselves in the future. Just try to balance the economic side with the management aspect.

You should not also be engrossed in complicated investment strategies. Try to keep things as simple as possible – invest in companies with good track records and economies, impose a margin of safety for all your investment options, and invest with the long-term period in mind. As Warren Buffett, the wizard of investment likes to say, if you cannot hold on to an investment for 10 minutes, then don’t think that you can do so for 10 years.

The most important of all stock investing tips is to set your expectations in the right manner. Many naïve stock investors come into the stock market thinking that the billions of Warren Buffett can be theirs in a few short months.

Take note that the stock market is as volatile as can be especially during times of economic recessions, like we have now. If you can keep reasonable expectations, then you will not be frustrated with the average return of investments at 10-12 percent per annum, less time than a year, if you play your cards right.