Summary:
In stock investment, not every investor can skillfully buy low and sell high. Profits are only achieved when they truly sell.
Stock investment is described as a practice in which the gap between success and failure often depends on key factors. Ordinary investors often encounter market fluctuations and change their beliefs, but the process of making money is very challenging. The investment world has always upheld a principle: it is not difficult for those who make money and not for those who find it difficult. However, the reality is that the vast majority of investors have suffered heavy losses, with only a small number of people able to continue growing their assets and even navigate the waves of bull and bear markets. In this article, we will clarify two important points and introduce five ways to make money in the stock market.
Firstly, not all investors can buy stocks at low points and sell at high points, like those who are clever and lucky. Secondly, stocks can only achieve profitability when they are truly sold. The ups and downs during the period of holding stocks can only be considered as gains and losses on the book, but in the next second or the next day, fluctuations in stock prices may have an impact on your account. Therefore, understanding the different profit models in the stock market has become crucial.
The first approach is to invest in performance-growth value and distribute dividends. If you buy a stock at a reasonable valuation and the company's performance can maintain stable growth, your annualized return will also increase steadily. When the valuation remains unchanged and the time is extended, the compound interest effect will be very strong. However, this approach requires patience and firm belief, as it typically requires long-term retention.
The second way is to rely on expected earnings. This method can be divided into two categories: one is the oversold reversal type, which refers to buying stocks after a significant drop in stock price due to bearish news. When the market believes that the stock price has dropped to a reasonable level, if future expectations improve, the stock price will return to its expected level or even rise. This price difference is usually significant because it requires judgment of future situations, which is a challenging task that requires experience and research.
Another way to increase the expectation difference is to invest in growth stocks. When the market does not anticipate an industry explosion or a doubling of performance, stock prices may undergo drastic changes. However, the expectation gap for growth stocks is very difficult to predict, as commercial operations are inherently unpredictable, especially in terms of technology and industry development. This requires investors to have more experience and courage.
The third way is to utilize stock price fluctuations and implement a high-sell, low-buy strategy. Even if a stock has stable growth and a reasonable valuation, its stock price will fluctuate. This fluctuation is a normal manifestation of the capital game and also shows the liquidity of stocks. To successfully execute this strategy, it is necessary to master technical analysis tools such as moving averages, trend lines, morphological analysis, MACD, etc. The fluctuation of stock prices is influenced by many factors, and the biggest difference from value investing is that it cannot predict value but relies on technology and emotional analysis.
The fourth way is to rely on fate in a bull market. However, bull markets are not common and opportunities are limited, so it is necessary to cherish and grasp the right timing.
The last way is to issue new stocks and bonds. This requires good control over market sentiment, not necessarily pursuing the highest returns, but ensuring profitability.
Making money in the stock market is not easy; it requires continuous learning and adaptation to market changes. Only by understanding different investment methods and selecting appropriate strategies based on one's own situation can one achieve success in the stock market. Not only do you need to do the right thing, but you also need to maintain the right mindset and patience, which are the keys to success. I hope this article can stimulate your thinking and bring a better future to your investment path.
Disclaimer: This material is for general information purposes only and is not intended as (and should not be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by EBC or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.
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