How to approach stocks,
There are several approaches in stocks investment, many stock investors has their particular ways they approach stock business but at the end their aim is all the same, that is to make profit and to avoid loss. All the approaches that may be adopted by a stock investor most be based on the this philosophy;
· Capital appreciation:
· Buying for a future gain.
Capital appreciation: means a rise in the value of a stock based on a rise on its market price; it includes anything above the original price over which a stock is bought. This is called the speculative strategies, stock investors that fall in this category buy stocks in anticipation of a sharp rise in price, it may take shot time or longer, but either it take time or not investors in this categories has no fixed time with the holding of the stocks, but have a targeted stock value, that is a fixed price at which they plan to sell off the stocks they are holding.see how to approach stocks
Speculative strategy has a lot of risks; a speculative stock investor has to add extra effort to his investment by carefully monitoring the stock market and to take a decisive action when his threshold is reached. He must be ready to work and conduct researches.
An investors buying a stock for a price gain, has to check the present price of the stock he is buying to ensure that he is buying the stock at its peak price because buying a stock that has already reached its peak price is a mere waste of money and a potential loss looms, he has to ensure that the stock he is buying is new into the market.
Knowing when to dump the stock is crucial to an investor buying for capital appreciation, he /she must have a threshold price otherwise called an exit price, he must not wait for dividends or bonus declarations but to stick to his plan otherwise he lose. see how to select good stocks
Buying for future gain: this is known as the accumulative strategy, buying for a future gain implies buying for dividends, payout, rights and bonuses in the long run. This approach is less risk and therefore advisable and favorable to those who don’t want to conduct market research continuously, but before buying any stock for long run ensures that there is a potential for growth.
You can follow sectoral investment strategy, one stock investment strategy or index portfolio strategy, details on gold stocks
Sectoral investment strategy implies buying stock from one sector of the economy, banking stocks, oil and gas stocks, or insurance stocks. Here , it enable the stock investor to concentrate on the single sector and conduct adequate research that enable him pick viable stocks from the sector and hold.
One stock investment strategy, here the investors concentrate on a single stock from a single firm and invest solely in that firm, the great risk here is that the investor tend to lose his investment should the firm liquidate. While in index portfolio the investors tend to invest by picking only the viable and promising stocks from all sectors of the economy any from any firms.