Investment entails spending or setting aside money set for future financial gain. Investment may include purchasing financial assets such as stocks, bonds, funds, or insurance. Stock investment is one of the ways in which people put their money aside in order to gain more money later on.
Before investing money in acquiring stocks, it is very important to know why you are buying a particular stock in the first place. Doing so allows the investor to be able to act accordingly once the stock price falls dramatically. Having and knowing the right reasons behind buying a particular stock gives the investor a better idea as to what to do when stock price goes down. Stocks bought as momentum decisions may be sold quickly upon price falls, but if bought as undervalued stocks, then investors may want to buy even more stocks. Employing a stockbroker may be very helpful for novice stock investors, as they can provide relevant information regarding stock purchases and sales.
Stock Investment Styles
There are six main stock investment styles. The efficiency of each style depends on the reasons and the needs of the investors.
Brother-in-law investors rely on the advice of other people when making stock purchases and when selling the stocks themselves. The people they trust do have access to great stock options but must act quickly to optimize the great scoop.
Technical investors carefully study and then map out stock patterns prior to acquisition and trading. Their investment styles rely on calculated stock price projections and the use of computers to check on correlations and spot existing patterns.
Economist investors typically base their decisions on economic forecasts. They take on risks which compensate the money they invest in stocks based on efficient market hypotheses.
Scuttlebutt investors make decisions based on information gained from vendors, researchers, trade executives, and even rumors which are then pieced together to form an accurate picture.
Value investors attempt to value stock independently of its market price.