Investing Strategies

Stock Investing styles

There are numerous stock investing styles that stock investors utilize, some of which are appropriate for the beginner stock investor while others are best suited to the more knowledgeable and experienced stock investor which involves speculative strategies.

Some of the most popular investing strategies are:

  • Growth Investing: Focuses on companies with sales and profits that are increasing at an above average rate.
  • Value Investing: Focuses on companies where the current stock price is less than what the company is worth.
  • Dividend Investing: Focuses on companies that pay reliable dividends. This style of investing is also known as Income Investing.
  • Blue-Chip Investing: Focuses on the largest companies by market-cap, especially those in the DOW index.
  • Small-Cap Investing: Focuses on the smaller companies by market-cap that have significant growth potential.

Some stock investors will concentrate on only one investing style while others will utilize a variety of investing strategies.

There is no right or wrong way to invest in the stock market and the strategy used is at the sole discretion of the stock investor.

Growth Investing

The growth investing strategy is the status symbol of the bull market and the booming economy. Under these buoyant market conditions, this style of investing produces some fantastic returns and there is only one catch – the inevitable bear market that follows which can destroy the value of a portfolio. As such, this strategy requires a thorough understanding of the stock market.

Value Investing

The value investing strategy is a double edged sword. On the one hand it is a relatively low risk strategy that provides one of the highest long-term returns available from the stock market when utilized correctly. However when utilized incorrectly, especially by inexperienced or unknowledgeable stock investors, this strategy can produce poor results and can even be downright dangerous.

Dividend Investing

The dividend investing strategy is a fairly conservative investing style that is mostly concerned with the steady income stream obtained from the stock dividend payments. This is a relatively safe strategy for beginner stock investors to incorporate into their investment portfolios.

Blue-chip Investing

The blue-chip investing style is considered the most conservative approach and many professionals recommend this strategy as a good style for beginner stock investors to start off with.

Small-cap Investing

Conversely, most professionals would advise the beginner stock investor to avoid small-cap investing until their knowledge and experience level is sufficient to manage the higher risks associated with small-cap stocks as these are could be speculative stocks.