Investment Strategies for a Volatile but Rallying Stock Market

Stock market investment operations are not as complex as they are made out to be. If the ambitions are modest, one can make tension-free investments and expect a reasonable return as compared to other modes of investments. The ambitions of most of the investors are high, they visualize unreachable final frontiers in their efforts to beat the market, and get into trouble. Market suddenly turns volatile, all the calculations and strategies go haywire, and the best of the analysts keep their fingers crossed. During the recession two years ago, share markets all over the world felt the heat and millions lost their life's hard-earned savings, within a short period.

Is there an unfailing investment strategy to protect the investors? The clear and straight- forward answer is "No!" Your share broker is not your insurance manager. Pay the premiums regularly and on maturity of the policy take the money back with bonus! An investor needs to follow a strategy and it needs to be modified as per the demands of the situation. Innumerable factors affect the price of a share and their order of importance is not possible to list out.

A strategy depends on the goal of the investor. For planning the strategy, Fundamental Analysis and Technical Analysis are the primary tools. Having done that, decide about the quantum of money that you propose to invest to create a portfolio. Have a moderate portfolio consisting shares of not more than 10 companies. Next, think about the timing of investment. If the timings are right, you are a winner. If the timings are wrong, you are a loser, even though your strategy is perfect.

Even during the global recession, some of the companies were doing extremely well. What does this mean? While creating the portfolio, a segment-wise approach would save the situation of losses. For future investors, this will be an interesting issue to be noted. Which segment of the industry withstood the onslaught of the severe recession and came out with flying colors even in such extremely volatile conditions of the market?

For investors with a long-term perspective, passive investment is an ideal strategy. The short-term and medium term market ups and downs will be of no consequence. Such an investor is concerned with regular dividends, long-term capital appreciation etc. Buy and hold strategy yields very good returns in the long run. If you peruse the share market history for the last three decades, the share market has moved upward notwithstanding two major market crashes in 1987 and 1989. The market is again on the move after recession hit the market about two years ago.

Following a strategy is not the end of the journey in a volatile but rallying stock market. It is the beginning. Make modifications as per the demand of time and you will learn new issues, with every trade done in uncertain conditions. All strategies, simple or complex, demand ongoing study and research and every day are a new day in the stock exchange, demanding innovative strategies. Remain disciplined and patient always.