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The Reason You Win or Lose In the Stock Market

The Reason You Win or Lose In the Stock Market

The stock market is truly a gamble. It’s similar to a large casino, but with more sure, educated bets. People invest in stocks based on information and research. Investors place their clients’ money in investments and mutual funds based on past performance and the stability of the funds.

But what makes those stocks go up or down? The reason: investor confidence. If a company announces a positive return based on what is called a forecast, the chances of the stock rising are pretty good. On the other hand, if a company does not meet forecast earnings, their stock is destined to fall.

To check on the biggest stock gainers today, there are plenty of websites focused on the big picture when it comes to stock investing. They exist to tell you how a stock is performing and what the best stocks are to purchase, all the way from penny stocks to the big share masters.

If you are thinking of investing, the best move is to consult with an investment adviser. They are there to help you make the right decisions based on research and experience. Your level of investment depends largely on your commitment. How much can you afford to invest? Have you looked at all options? The best move is to start out small with inexpensive stocks. This way, you get your feet wet with the process and learn about different trends in the market.

People are spending their money in a foolish manner. Instead of investing their money, they are looking to spend and then take out loans to repair their financial situation. The problem with this logic is that they end up owing more than what the loan is worth. The reason is interest. But why not make interest a good thing? Investments help you with this. Interest gained from an investment is considered income and can certainly increase your involvement in investing. However, the return is not guaranteed. Past performance does not guarantee future returns. Investments live and die by this rule.

If you are looking to invest, practice to a certain degree what the financial savvy investors do. They research stock, look at past trends, study the environment the particular organization is in, and then strike when it’s hot. This usually requires heavy use of the internet as well as the advice of investment experts or financial gurus.

One of the things they most surely research is the level to which stocks perform. Value stocks are different than momentum stocks. Value stocks represent shares of a company with entrenched fundamentals that are priced below those of its peers. Momentum stocks are more aggressive, as their title stipulates. Lately, more investors are choosing value stocks over momentum stocks.

What is the reason behind choosing value stocks? One reason might be a fear of a recession. Investors want to ensure their stock is locked in with a company that is stable and almost impervious to an imminent financial decline. The prices of stock are based on both past yields and future developments. Investors probably study the news more than anyone. They see the jugular and go for it—when the time is right.

Stocks rise and fall every day based on different elements. The biggest of these is probably how a company meets or beats its expected earnings. Companies such as Amazon and Microsoft have exceedingly demonstrated how they beat the forecast earnings, thus making their stock skyrocket.

Does a stock price determine the success of the company? It does not necessarily tell how a company is doing, rather, it tells how the company can maintain change, or stabilize its future. Stock investing is a gamble, but it’s a gamble that can give you back more than what you initially invest. The beauty of the stock market is that you can normally research and base your findings on possible future events. As an example, if you purchase stock in Amazon, once you have shares, you own a part of the company. With that information, you can see how the stock increases or decreases with the quarterly report. The SEC oversees this process and releases information if the stock is hot or cold.

Again, the stock market can be a gamble, but it might be a gamble you are willing to take if you play it smart and do your research on the stocks you intend to buy.


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by Lottie Pritchard // Lottie Pritchard is a contributor to Businessing Magazine.

Opinions expressed by contributors are their own.