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Safe Ways of Making Big Money in the Stock Market - Stocks / Mutual Funds
About Making Big Money in the Stock Market - Stocks/Mutual Funds
It is only a very small percentage of investors who earn really large returns on
their investments. To be successful in the stock market you need to have expert
guidance. There are many fake experts around following whose guidance many investors
have suffered big losses. Many experts claim huge performance gains. Usually they
are not teeling the whole story about their portfolio. They highlight the winning
stocks only and hide the losing stocks.
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Good past performance of a mutual fund does not necessarily indicate good future
performance. Investing in growth stock may be too risky. Similarly day trading is
very risky. It has been shown that over a long term risky methods produce overall
loss even though their may be immediate short term large profit. What is a safe
method of making good profits in the stock market? The method is called Value Investing.
(Brief definition of Value Investing: “The strategy of selecting stocks that trade
for less than their intrinsic value. Value investors actively seek stocks of companies
that they believe the market has undervalued. They believe the market overreacts
to good and bad news, causing stock price movements that do not correspond with
the company's long-term fundamentals. The result is an opportunity for value investors
to profit by buying when the price is deflated.”). Value mutual funds are less volatile
than growth mutual funds. It has been seen that value mutual finds performed much
better than growth mutual funds in a bear market. In any portfolio, maintain a “margin
of safety” to have a very high investment return in the long run. Don’t forget the
basic principle “Never lose money!”.
Many people believe that value investing cannot make you rich as it is low risk
with low performance. But studies that have compared all the investment methods
over the long run have shown that value investing was the only method that consistently
produced large returns.
Another advantage of value investing is that it does not require a regular follow
up, especially if you have a value mutual fund. Thus you can indulge in value investing
along with pursuing your regular job.
It is never too early to start in value investing. The longer you do it the higher
your profits. Remember the only true successful investment plan is a long term one.
If you want more information on Stocks, use the search box below:
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