Investments

Investments
By: www.CandleStickForums.com

Investments come in all shapes,
sizes, and types. They are the
dedication of current assets for a
future purpose. Money put into a
business is a common form of
investment as is the purchase of
stocks in order to build a nest egg
for retirement.

Market investments can include
common stocks or preferred
stocks, purchased options, bonds,
foreign currency, bank accounts,
precious metals and IRA’s.
Successful investing creates wealth.

Investments of money, expertise,
and time can be conservative or
aggressive, very safe or very risky,
and can be lucrative or bring about
financial disaster. Conservative
investments have historically
started with buying a home.

That was before sub prime
mortgages artificially drove up the
price of homes and then caused a
near collapse of the real estate
market and the devaluation of
many real estate investment trusts.

Another conservative investment
has been to devote a portion of
one’s portfolio to precious metals.
Gold bullion quadrupled in price
from 2000 to 2009.

Keeping a reserve of cash has
always been considered safe and
conservative but during the
runaway inflation of the late 1970’s
the dollar lost a substantial amount
of buying power. The stock market,
over the years, has tended to
outperform other investments.

Buying stocks can result in
multiplying an investment but
picking stocks is all important as is
ongoing stock analysis.
Understanding return on
investment and how to maximize
it, without undue risk, is the key.

Success often starts with choosing
which type of investments to make
and them making each individual
investment. For example, as a
recession mends itself, the stock
market typically starts to go up
halfway through the recession.
There will be market leaders and
there will be stocks that lag.

Many of the laggards will be
targets for value investing. Value
investing is choosing stocks with
low price to earnings rations or
stocks whose values are low in
light of expected earnings. Famous
investors such as Warren Buffett
are champions of value investing.

In the depths of a recession stocks in
companies that make basic consumer
goods do well. The companies do not
necessarily make more money. They
simply continue to do business selling
laundry soap, household cleaners,
paper towels and the like. They
become attractive because many other
companies become so much less
profitable.

Market timing is important
because the best time to invest in a
basic consumer goods company is
typically just before the recession
starts and the best time to get out
of the same stock is typically when
the recession starts to mend and
other stocks start to rebound.

This is not so much to recommend
the likes of Chlorox, Colgate, or
Proctor and Gamble as to point out
the advantages of market timing
and stock trend analysis.

Looking to the future, investing in
companies that have a good track
record of turning basic research
into paying products is an excellent
bet. Many pharmaceutical giants
got that way by reliably creating
life saving and money making
medicines derived from basic
scientific research.

Small bio tech startups often are
lucrative investments but stock
analysis, familiarity with the
market sectors involved and the
company’s competitors, and
knowledge of how a drug moves
through the various FDA trials to
final approval is critical to this time
of investment.

Investments

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Investments