Asian Share Market, Asian Stock Market

With more than a couple of hundred companies listed, it becomes very difficult to identify those, which could become profitable investments. While we have talked about a few of the investment strategies in other pages, let us have a look at a few more for our understanding.

Growth investing
Growth investing involves investing stocks of companies that have a strong potential for growth in sales and profits. Thus investors following this strategy look for companies which have a great underlying quality of business and are capable of increasing sales, earnings and other important parameters for achieving growth. Stocks which appear as growth potential seem expensive. However, looking at their potential, these stocks are bound to give good returns. An example for such strategy will be Infosys in Indian stock markets, which looks inexpensive at a PE ratio of 30. Yet with a annualized growth of 35 to 40% expected for next 2 financial years, stock is bound to give more than decent returns/

Buy-and-hold investment strategy.
The strategy involves buying good quality stocks and then holding them for a long period. The stock is bound to give you decent returns over a period of time. The strategy can better be explained with the example of Reliance stocks which have benefited millions of investors who remained invested in the stock despite short term hiccups and negative sentiments arising out of acrimony and division of business between Ambani brothers. All those who withstood the period of uncertainty would be laughing all the way to their banks with outstanding performance and astounding results shown by both the groups.

Market timing strategy
The strategy involves timing the market to perfection so that you are able to exit at tops or near tops are enter at bottoms or near bottoms. The strategy requires keen understanding of the market sentiments, quick reflexes and ability to take and bear risks as market may move against you in no time. However for keen practitioners of the strategy, it is a good opportunity to make money. The recent fall in Index (Sensex and Nifty) means good time to enter the market and reap benefits from a long term point of view.

Value averaging
Value averaging strategy is a good strategy to reap the benefits of rise and fall in market. The strategy involves prescribing a target value of your portfolio and then scaling up or down your investment amount. For example, you may like to have an investment portfolio of Rs. 100 every month. Thus first month, you invest Rs. 100. If at the end of first month, your portfolio value has declined to Rs. 90, you invest Rs. 110 next month, to make your portfolio worth Rs. 200. If at the end of 2 months, your portfolio increases to Rs. 230, you invest only Rs. 70 additionally to make your investments value at Rs. 300. Thus by following this strategy, you tend to invest more when the markets are down and less when markets are up. In fact the strategy also allows you to do profit booking and take advantage of appreciation.

You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.