We are now on the second part of this series. This is a discussion on the principles of investment in the stock market. We have already discussed the first principle. The first principle dealt with realizing that the stock market is just another investment vehicles. Before deciding to invest in the stock market, you must know about other vehicles of investments. Let us proceed by discussing the next two principles. If you wish to view the article in its entirety, visit my blog.
2.) You must know that investing in the stock market is a roller coaster ride - One of the advantages of the stock market is that there are times when it really climbs up then really big profits are made. However when it really goes down then really big losses are also made.
The general strategy is to sell when the market is up and to buy when the market goes down. About two years ago when I started investing, the Philippine Stock exchange index was only about 2000 + points. I've seen it go up to 2500 points and slide back to the 2000 level in the middle of 2006. It slowly and steadily climbed up to the 3200 level in the 1st quarter of 2007 and dropped in a very short period of time during the last days of the 1st quarter of 2007. It climbed steadily to a high of 3700+ points in July 2007 but slid back below 3000 points a month after. By October 2007 it climbed steadily to its highest at 3800+ points. A month after it dropped to 3600+ points.
The point here is that it is really a roller coaster ride. Profits and losses are made during those up and down moments of the market.
3.) You should determine what type of investor you are - Are you a long term investor or a short term investor? This is a very important question that each serious new investor should consider. This affects whether you should buy or sell a certain stock.
If you are a long term investor, meaning that you hold your stocks for 5 to 10 years or more it means that you believe in the company that you are investing in and that you have extra money for other things because you can afford to put in your money for a long period of time.
One of the main benefits of being long term investors is that you do not have to worry about monitoring the day to day technical analysis. There is no problem if the stock is held for a long period of time since what is considered is the strong fundamentals of the company. On the other hand, short term investor,who decide to cash in within a months time to 6 months time, will have to monitor the day to day market activities to ensure that they are making a profit.
Like the long term investor, you have to make sure that you can afford to put in your money for a long period of time but not as long as the long term investor. The reason for such is because during the short period wherein you plan to invest and pull out your stocks, you may incur losses during that time so you may decide to wait a little longer.
When I started out I determined to be more of a long term investor. I do have stocks whom I consider as short term but I consider most of the stocks I hold to be invested in the medium and long term period. - 16003
2.) You must know that investing in the stock market is a roller coaster ride - One of the advantages of the stock market is that there are times when it really climbs up then really big profits are made. However when it really goes down then really big losses are also made.
The general strategy is to sell when the market is up and to buy when the market goes down. About two years ago when I started investing, the Philippine Stock exchange index was only about 2000 + points. I've seen it go up to 2500 points and slide back to the 2000 level in the middle of 2006. It slowly and steadily climbed up to the 3200 level in the 1st quarter of 2007 and dropped in a very short period of time during the last days of the 1st quarter of 2007. It climbed steadily to a high of 3700+ points in July 2007 but slid back below 3000 points a month after. By October 2007 it climbed steadily to its highest at 3800+ points. A month after it dropped to 3600+ points.
The point here is that it is really a roller coaster ride. Profits and losses are made during those up and down moments of the market.
3.) You should determine what type of investor you are - Are you a long term investor or a short term investor? This is a very important question that each serious new investor should consider. This affects whether you should buy or sell a certain stock.
If you are a long term investor, meaning that you hold your stocks for 5 to 10 years or more it means that you believe in the company that you are investing in and that you have extra money for other things because you can afford to put in your money for a long period of time.
One of the main benefits of being long term investors is that you do not have to worry about monitoring the day to day technical analysis. There is no problem if the stock is held for a long period of time since what is considered is the strong fundamentals of the company. On the other hand, short term investor,who decide to cash in within a months time to 6 months time, will have to monitor the day to day market activities to ensure that they are making a profit.
Like the long term investor, you have to make sure that you can afford to put in your money for a long period of time but not as long as the long term investor. The reason for such is because during the short period wherein you plan to invest and pull out your stocks, you may incur losses during that time so you may decide to wait a little longer.
When I started out I determined to be more of a long term investor. I do have stocks whom I consider as short term but I consider most of the stocks I hold to be invested in the medium and long term period. - 16003
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Which you could know more about investment strategies ? Visit the blog of Zigfred Diaz where he blogs about several interesting topics such as investments, money management, business, making money online and How to invest in the Philippine stock market
