Stock Investment

Investors who are active in the market usually have a stock strategy or investment approach that works for them. Some people use fundamental analysis for decision making purposes whilst others use technical analysis or a combination of both. There are infinite variations and approaches used by individuals and at the institutional level. Although stock investing strategies are often closely guarded secrets, if you do some research and reading you can still discover some great ideas. Stock message boards are a great place to start and books can provide useful background information. As you study and become more familiar with different styles, you will most likely formulate your own stock trading strategy that suits your knowledge, skills, experience and the timeframe you wish to invest for. Some initial background information is provided below for further stock strategy research purposes.

Income Investing: One stock strategy that is commonly pursuing is for dividend or income investing. This is where stocks are selected based on the amount of dividend yield paid. In some cases these stocks are mature stocks in well established industries that have shown regularity and consistency in their payout. Conventionally, buying stocks that offer a return greater than bank deposit rates is the objective. Investors can also make capital gains from stocks that are appreciating in price. Thus, in some cases, the objective is twofold: to capture a regular income stream and to gain exposure to growth in the stock price. It is a legitimate strategy that has merits for individuals who do research and invest wisely.

Growth Investing: Stock investing strategies that focus on growth opportunities use screening methods to determine candidates that are primed for growth. This can include earnings growth, sales growth, use of capital, or financial data that is deemed relevant to decision making. Many funds have mandates that focus at this level in an attempt to outperform the market. Although you will find commonality with this approach, it is rare to find two individuals who will approach stock selection in exactly the same way. It is a valid stock strategy that can be emulated by the small investor. William O'Neil is a great place to start for growth oriented investors.

Technical Analysis: Many individuals use technical analysis to invest in stocks. The stock trading strategy employed in this respect is wide and varied. Charting and indicators are used to make investment decisions. The weekly and daily charts are used for analysis purposes. There are many books written on using technical analysis which provide a useful framework of reference for individuals who want to develop further education to form their own stock investing strategy.

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