What Are Defensive Stock Market Trading Strategies?
The Bulls and Bears of stock market would have been much easier to grasp had it been exactly about the bulls and the bears- the ones that roam on all fours with twirling tails in their backs. Alas!, that such a wish might not come true. Indeed, the stock market is not a zoo caging the wild bull and the grizzly bear, but wild and grizzly it certainly is. The brave, aspiring souls who want to whip up a big load of cash within too short a time have dabbled in the shares and stocks, and their losses have proved to be warning examples for the more timid kind of this race to stay away from the stock market.
Aggressive stock investing means taking greater risks. The risks can take numerous forms. You invest in highly volatile market when the fluctuations in prices defy all the techniques of analytical and fundamental research. There are rises and falls in prices of stocks which occur contrary to the investors' expectations. There are daring and imaginative investors who manage to make money even in these uncertain circumstances.
Another form of aggressive marketing is that you invest in stocks which appear to be 'gone cases' according to popular calculations. But quite contrary to all the wise counsel, they show high growth and deliver rich dividends. Of course, they may also fall further down since they are already gone cases.
On the other hand, you invest in some stocks like Wal-Mart, fully aware that they are costly and their price may not rise in near future. Few people know that buyers of such high value stocks do not invest in them to make money through the rise in their prices, but rather these companies pay rich dividends to their investors year after year so that they become a source of their regular income and livelihood. The dividends paid by such blue chip companies almost nullify the high prices of their stocks which people pay to buy them.
Of course these stocks have pros and cons just like any other stock, so it pays to know more about them before deciding how to proceed. One of the main advantages is that if you invest in defensive stocks you are less likely to be affected by what happens in a recession. They may go down marginally in value but it isn't likely to be by much.
Conversely they can also fail to appreciate much in value because they are so steady. If you are looking to make a healthy profit on the stock market, defensive stocks are not the best things to invest in because of this. They are unlikely to go up much in value.
But again they are the safe haven to which many investors flock in hard times. When businesses are going under because of difficult economic conditions you don't want to be holding stock in any of them. By investing in defensive stocks you can be reasonably sure your investment will be safe.
As such they provide a distinct advantage when you want to make money from your investments in recessionary times. Some people invest in other stocks while times are good, and then move their money over to defensive stocks when the economy is going through a recession. This makes sense as such stocks will often provide a much better return for you at this time.
For a new entrant in share investments, the defensive approach is not only desirable, but it is absolutely essential You may be an expert in theories related to the share market, you may be Chartered Accountant, Cost Accountant or Certified Financial Analyst. But the tempest in the Exchange, when it arrives ferociously, blows out everything. Those with high practical experience also shake and tumble. The best policy is to take moderate risks, when you earn a sufficient amount by trading in shares. Initially you may gain less returns, but your gains in experience are rich and they will stand you in good stead for future dealings.
Defensive stock marketing strategy can as well be the permanent policy of your investment. Your portfolio must remain diversified, as there are many investment opportunities, catering to one's needs for different stages of one's life. Your broker will give you details of such investment options. Divided reinvestment plan is one such safe area of investment. Most of the treasury bonds are also fine. Since they are exempt from state and local taxes, the net yield at the 35% tax bracket, works out to about to 35%.
Get More Defensive Stock Tips Via SMS
Aggressive stock investing means taking greater risks. The risks can take numerous forms. You invest in highly volatile market when the fluctuations in prices defy all the techniques of analytical and fundamental research. There are rises and falls in prices of stocks which occur contrary to the investors' expectations. There are daring and imaginative investors who manage to make money even in these uncertain circumstances.
Another form of aggressive marketing is that you invest in stocks which appear to be 'gone cases' according to popular calculations. But quite contrary to all the wise counsel, they show high growth and deliver rich dividends. Of course, they may also fall further down since they are already gone cases.
On the other hand, you invest in some stocks like Wal-Mart, fully aware that they are costly and their price may not rise in near future. Few people know that buyers of such high value stocks do not invest in them to make money through the rise in their prices, but rather these companies pay rich dividends to their investors year after year so that they become a source of their regular income and livelihood. The dividends paid by such blue chip companies almost nullify the high prices of their stocks which people pay to buy them.
Of course these stocks have pros and cons just like any other stock, so it pays to know more about them before deciding how to proceed. One of the main advantages is that if you invest in defensive stocks you are less likely to be affected by what happens in a recession. They may go down marginally in value but it isn't likely to be by much.
Conversely they can also fail to appreciate much in value because they are so steady. If you are looking to make a healthy profit on the stock market, defensive stocks are not the best things to invest in because of this. They are unlikely to go up much in value.
But again they are the safe haven to which many investors flock in hard times. When businesses are going under because of difficult economic conditions you don't want to be holding stock in any of them. By investing in defensive stocks you can be reasonably sure your investment will be safe.
As such they provide a distinct advantage when you want to make money from your investments in recessionary times. Some people invest in other stocks while times are good, and then move their money over to defensive stocks when the economy is going through a recession. This makes sense as such stocks will often provide a much better return for you at this time.
For a new entrant in share investments, the defensive approach is not only desirable, but it is absolutely essential You may be an expert in theories related to the share market, you may be Chartered Accountant, Cost Accountant or Certified Financial Analyst. But the tempest in the Exchange, when it arrives ferociously, blows out everything. Those with high practical experience also shake and tumble. The best policy is to take moderate risks, when you earn a sufficient amount by trading in shares. Initially you may gain less returns, but your gains in experience are rich and they will stand you in good stead for future dealings.
Defensive stock marketing strategy can as well be the permanent policy of your investment. Your portfolio must remain diversified, as there are many investment opportunities, catering to one's needs for different stages of one's life. Your broker will give you details of such investment options. Divided reinvestment plan is one such safe area of investment. Most of the treasury bonds are also fine. Since they are exempt from state and local taxes, the net yield at the 35% tax bracket, works out to about to 35%.
Get More Defensive Stock Tips Via SMS
Source...