Best Investment Strategy for Stock Market

The stock market is all about the prediction of the future price of a stock by making use of fundamental analysis, technical analysis, qualitative analysis, profit and loss account, balance sheet etc. After making a proper analysis of the above-said factors of a stock you can predict the future of the stock. Friends, in this context we will describe the best investment strategy for stock market to get success in the stock market.

First of all, there are three types of investors namely-

Fisherman Investors

A fisherman goes for fishing every day. He sometimes gets success and sometimes not. This success depends on proper strategy and luck. Like this, there are investors called fisherman investors. These fisherman investors are active traders and operate intraday trading. A fisherman buys and sells stocks every day with proper strategy and a proper stop loss without watching out the fundamental aspects of stocks. So, a fisherman i.e., novice investor tends to make a loss in 90% cases. Fisherman investor has to depend on luck. He just acts of gambling. One day he gets success and someday suffers a huge loss in options and futures trading.

Farmer Investors

A farmer first selects which crop to cultivate. Then he works accordingly for 60-90 days tirelessly. When the crop is matured, the farmer receives his profit. There are investors who invest money for a short duration of time usually between 6 months and one year. After investment they expect their money to be doubled in the short-term horizon of one year. Usually, the stock market remains volatile for a short duration. This volatility depends on various reasons like political, economic events, a launch of government policies. The companies in which you invest have a weak quarterly result are tend to correct accordingly. So, if you have a short time horizon and sell the stock you will definitely make a loss.

Intelligent owner of acres of land

An intelligent owner of acres of land at first decides what to sow. Then he gains knowledge about the soil. After analyzing all factors, he cultivates for every year. He tackles all difficulties associated with farming. After setting all things accordingly he waits for trees to grow fruits. An intelligent farmer plants the trees of costly fruits like apple, orange, pomegranate, nuts etc. to gain maximum profit. And these trees will give fruits in the upcoming years. This is a smart act of cultivation. Like this, intelligent investors invest in a way so that they can get better returns from his investment.

The Best Investment Strategy for Stock Market

Now let’s discuss the above-mentioned examples for how to implement them to invest in the stock market. Both the fisherman and the farmer depend on luck and have a short-term perspective. There is the least probability of success for fisherman and the farmer to earn multi-bagger return within one year or less. It is almost like tossing a coin. When a striker takes a penalty in any football match, it becomes very difficult to save the goal for a goalkeeper. Something like that happens for fisherman and farmer type investors. If they make even a small mistake they are subject to a huge loss. 

Usually, investors put their money in the stock market in the hope that the returns gained will beat the inflation and create wealth over a long period of time. Let’s make it clear with an example. There is a common trending topic of an electric vehicle. So, after making a proper analysis of the sector, you may choose such stocks which are capable of delivering better returns. There is another way to choose such sectors and stocks which are capable of giving a steady return over a long time horizon. Let’s make it clear with another example. Suppose you choose paints and pigment sector for investment. Then you notice that Asian Paints has delivered a robust earning on a year-on-year basis. Therefore you choose this stock and start investing in it for a long time horizon to get better returns.

Final Thoughts,

According to Benjamin Graham “You can’t predict market”. Most of the investors forget or ignore this extreme truth in the desire of making quick money via intraday trading or trading in future and options without knowing anything. On the other hand, intelligent investors remain engaged to find and check out all the aspects of stocks i.e., Fundamental analysis, qualitative analysis, technical analysis etc. Intelligent investors always make research whether the stocks are capable of giving him a satisfactory return in the long run. They do not worry at all about the short-term ups and downs of the specific stocks which have strong fundamentals.

If you have any question regarding the best investment strategy for stock market feel free to comment so that we have a discussion. If you found this post helpful share with your loved ones.

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