- Everyone who invests in the stock market does so to make money; there are several stock strategies that people use to achieve that end. As an investor, you might want to choose companies in particular industries, or you may choose to only focus on companies with record financial profits and consistent growth. Either way, there are stock strategies you can use, whether you're an aggressive investor or prefer to play it safe.
- Buy and hold stock strategies rest in the belief and assumption that over the long-term, stock prices will go up. Investors who use the buy and hold strategy do not choose stocks based on whether they think prices will rise or fall "tomorrow." Instead, they often choose a mixture of companies and hold the stocks for the long-term: usually 10 years or longer. Long-term buy-and-hold strategies typically work. In fact, research by the Charles Schwab Company in 2006 examined this strategy as if it were in play between 1926 and 2005. The research found that a 20-year buy and hold strategy during this time always produced a positive result.
- Market timing stock strategies involve purchasing stocks at low prices and selling them high. This method often relies on tools that help predict the market, such as technical analysis or fundamental analysis. Technical analysis involves reviewing market data, such as price and volume charts. Fundamental analysis evaluates a company's financials, such as sales, growth potential, assets and debt. Timing the market may often be based on a person's own intuition of what they "feel" or can reasonably judge concerning whether stock prices will rise or fall.
- Growth investing involves buying stocks from companies that have the most potential for sales or revenue growth. Growth investors look at a company's growth rates and the earnings per share of stock, and examine the overall quality of the business. Individuals may look for new, younger companies which have potential for growth, which also means that this stock strategy poses higher risks than others.
- Value investing, an opposing stock strategy of growth investing, involves purchasing undervalued stocks. People who use this strategy assess a company's intrinsic value (the dollar amount the company would be sold for if it was sold tomorrow) and purchase based on how much below market value they can buy the stock. Companies which have undervalued stocks are often those that have fallen out of favor with the investment community or those that have just reported poor earnings. Value investors usually have rules for judging which company is a good candidate for this type of strategy. Their analyses involve reviewing price-earnings ratios (current prices of stocks divided by earnings), dividend levels (cash payments to investors) and total revenue and sales levels of the company.
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