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Wednesday, March 4, 2009
The simple answer to this question is yes, with a small (but important) caveat: as long as you have the right information to be successful.
There's no way to predict what direction the stock market will be taking on a given day. Because of this short-term volatility, it's easy to see why understanding the basics of the stock market is key to success. The past couple of years have certainly not brought about good news, but as usual, where some people lose, others profit.
It's amazing how "sales" in other markets are advertised on TV, but "sales" in the stock market (also known as bear markets) are treated like they're the worst things to happen. Bear markets do have benefits though: since everybody's succumbing to panic and selling, all stock prices are negatively affected, sometimes wrongly so: those are the bargains you need to spot.
Naturally, stock prices that are going down are not good news for people who are heavily invested in the falling securities, but it's an opportunity for those that are not, provided that the company's fundamentals are solid. A little "out of the box thinking" can yield sizable profits.
It's easy not to look past the financial and real estate sectors in this crisis, since they've been hit the hardest. Yet there are sectors where companies are still churning out profits because their fundamentals are solid and they're well run. Do your due diligence, study financial statements, find them, and buy them.
If you don't learn about the basics of the stock market, you won't be able to look at the company you're interested in, analyze its financial statements, and determine whether or not its stock is down because of the general state of the economy or because the company's performing poorly.
When you find companies whose financial performance is solid, are well-run, and are turning profits near or at their usual levels, you need to buy them even if most people out there are selling them. Doing so gives you a great chance of seeing great returns in the years to come, when the downward spiral comes to an end.
There's no way to predict what direction the stock market will be taking on a given day. Because of this short-term volatility, it's easy to see why understanding the basics of the stock market is key to success. The past couple of years have certainly not brought about good news, but as usual, where some people lose, others profit.
It's amazing how "sales" in other markets are advertised on TV, but "sales" in the stock market (also known as bear markets) are treated like they're the worst things to happen. Bear markets do have benefits though: since everybody's succumbing to panic and selling, all stock prices are negatively affected, sometimes wrongly so: those are the bargains you need to spot.
Naturally, stock prices that are going down are not good news for people who are heavily invested in the falling securities, but it's an opportunity for those that are not, provided that the company's fundamentals are solid. A little "out of the box thinking" can yield sizable profits.
It's easy not to look past the financial and real estate sectors in this crisis, since they've been hit the hardest. Yet there are sectors where companies are still churning out profits because their fundamentals are solid and they're well run. Do your due diligence, study financial statements, find them, and buy them.
If you don't learn about the basics of the stock market, you won't be able to look at the company you're interested in, analyze its financial statements, and determine whether or not its stock is down because of the general state of the economy or because the company's performing poorly.
When you find companies whose financial performance is solid, are well-run, and are turning profits near or at their usual levels, you need to buy them even if most people out there are selling them. Doing so gives you a great chance of seeing great returns in the years to come, when the downward spiral comes to an end.
About the Author:
Carlton Hughes is a retired financial planner and has over 35 years of experience in the stock market. He regularly writes on several financial sites like Make Money Investing In The Stock Market and his own personal finance blog, Personal Finance 411.
posted by Credit Counseling at
11:27 AM
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