Buying Shares – Tips For Beating The Stock Market

In the present uncertain economic climate, many investors are wary of investing in the stock market. Some are even asking whether they should stop buying shares, and invest in items that are traditionally viewed as less risky, such as gold or government bonds. While it is true that investing in stocks and shares is risky at the moment, it should be remembered that such risk always exists, even in the middle of a stock market boom. There is no reason why the astute private investor cannot buy shares today and secure a handsome return overall in the long term, and this article offers tips on how to achieve that.

It is important to say that profit can’t be guaranteed on individual share purchases. For a variety of reasons – wider market conditions, global recession, issues specific to the company or group in question – it can happen that the price of a stock falls below the level at which it was purchased, and stays there. In this case, a classic strategy by small investors is to hang on to the stock until they can receive how much they paid out. This is wrong, as it can lead to an investment tied up long term in a moribund stock: it would be much better to sell at a loss and invest in shares that are likely to rise and make a healthy profit, over and above the money originally paid out. When buying shares it pays not to be too inflexible in strategy, but to be open to opportunities to make money, even at the risk of taking a temporary loss.

When buying shares initially, or when selecting which shares to buy, research is the key to avoiding losses. Never buy on a whim: always thoroughly research all of the issues surrounding any purchase. There are a number of different areas it is essential to research.

The first is to conduct general research on the stock market as a whole. Is the recent market trend for shares to rise or fall in price? Are any sectors performing better than others? Will any recent national or international events affect the performance of the market as a whole, or of individual sectors? All of these can determine which types of shares may be ripe for purchase. Places to research this information can be national newspapers and magazines, financial and political websites, and publications and websites particular to the stock markets themselves.

Once a sector or even individual company worthy of investment has been selected, then the relevant sector of the economy must be researched. Who are the big players? What are the trends in that sector? Is any new technology imminent that will change how the sector operates, bringing in new companies? Are any companies in danger of failing, and if so what is the cause? An effective analysis of these factors is of great use in finding a company to invest in whose stocks are undervalued and likely to rise. Sources of information can be trade magazines and websites, trade association publications, specialist scientific/technical magazines, and the usual financial publications and sites.

Finally, once a company has been selected it must be researched in detail before shares are purchased. What is the company’s trading record over the last five, ten or even twenty years? Is it profitable? Are there any potential threats to its income? Are there any new innovations it is developing that could boost income? How does it perform in relation to comparable companies in the same sector? All of these factors must be researched in detail before a decision is made to buy shares: a large amount of money could be lost if any corners are cut.

So it can be seen that many factors can influence the decision on which shares to purchase. Here are some key points to remember:

Be prepared to make a loss on individual stocks to ensure long term profits.

Never buy stocks and shares on a whim.

Research the stock market as a whole. What sectors are ripe for investment?

Research the target sector. Which companies’ share prices are undervalued compared to their potential?

Research the target company in detail. Are there any hidden problems? How does it compare to the rest of the sector?

When buying shares, it is important to consider these key points, and also to remember that any stock or share can both rise and decrease in value: there are no guaranteed successes. To get more tips on what to consider when share buying, and to get information on how to buy shares, go to http://ift.tt/1K7nyJp and find out more.

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