The stock market can be a scary place. Many people get out of stocks because they think they will make money at a certain point in time. That’s called being “smart”. Some get out because they think their strategy will work one day, and it just doesn’t. So, what is the best approach to buying stocks?
Of course, purchasing individual stocks means taking more risk than with broader diversified portfolios. If you are wondering what are the best stocks for investors, you might want to think about large companies with solid fundamentals, strong financials and robust balance sheets. Examples of this type of company would be oil exploration & Production, banking, consumer and pharmaceuticals. You’ll find that oil prices are unpredictable, and banks have huge balance sheets as well. So, oil & gas are a good choice for December investing.
Some people will wait until a particular industry is experiencing strong growth or at least passing through a troubling time in the public’s eye. You’ll find that there are many stocks that are doing well during these times, because many long-term investors are selling off their stocks to take advantage of the situation. The picks from this type of holding period usually last for the next several years. For most investors, these are the ideal stocks to buy right now, even if they aren’t really a smart buy at this point in time.
There are other stocks that are ideal for holding for the next several years. Examples include energy, utilities and the food market. These companies usually have steady growth, stable finances and a decent dividend yield. If you have a good understanding of the markets and how they affect each other, you should be able to pick which ones are safe to buy and which ones are a good buy during the next couple of years. It will likely be a combination of factors that affect the market value of your holdings.
As mentioned above, there are many different scenarios that can affect the market value of your stocks. However, one of the most common factors that affect holding times is news. If there is a report about a company that is undergoing an exciting new development or is projecting a very high growth rate for the next few years, it will likely influence the holding times of those stocks. The fact that news related to the business’s industry tends to impact all types of businesses, no matter what industry they are in, is why it is so important to keep up with the news.
One of the most attractive reasons to buy high-yielding, high-profit, low-risk securities is because the premiums remain stable during a bear market. That’s not to say, however, that you should ignore any type of news. If there is solid evidence that a company’s earnings per share are rising, that is a good time to purchase. Keep this idea in mind as you look for safe stocks: If the earnings per share are increasing, you should probably consider buying.
When looking for long-term gain, the optimal stocks to own are the “safe” ones. Safety begins with choosing an investment vehicle that offers high dividends; this means that if the share price drops (it could happen during a bull market), the shareholders are not losing much money. Dividends are guaranteed, and your portfolio is protected from any negative effects of falling market prices. Safe stocks earn high dividends regardless of the overall market, but you do not want to include any stock that pays a low dividend.
A “safe” investment option will be one that do not have a huge amount of risk, and it is usually comprised of established, blue chip companies. Look for companies that pay generous dividends and have a long history of financial stability. These types of stocks are more likely to stay competitive, and they usually offer a higher return on investment. In addition, the yield on these stocks will also be high, and this can offset some of the risk of an investment vehicle that is seen as having a high yield, but has a low dividend yield.