For investors, this decade is proving to be one of the most exciting, but also most volatile, times in recent history. Not only has the COVID pandemic wreaked havoc with traditional assumptions about the stock market, the global economy has been going through plenty of unique adjustments due to military conflict, political changes, and population growth in third-world nations. Some of the transformations have been positive and others negative.
For example, many day trading enthusiasts such as Warrior Trading have enjoyed the volatility, providing resources to beginners and looking to turn an otherwise negative situation into a money-maker. For others, the changes have not been so great. Some nations are undergoing extreme phases of unemployment for multiple reasons, including the shift of their economies from labor to service work forces. For the average investor, what are some of the smartest ways to thrive in the brave new world of securities, stocks, bonds, and cryptocurrency? Here are seven of the top investing styles that appeal to many of traders all over the world. Nearly everyone can find one or more to suit their particular tastes.
This technique has been around for at least a half-century but is seeing a renewed surge of interest for various reasons. In short, if you buy stocks and other financial instruments based on the moral, political, or social beliefs of its founders and upper management team, you’re a philosophical investor. When this way of doing things first appears, most of it was connected to corporations’ environmental policies. Nowadays, anything goes. It’s even possible to find a financial advisor who specializes in the niche. If you only want to put your capital into organizations that support gun rights, environmental causes, cannabis-friendly laws, or anti-tobacco politics, then you can easily find a list of corporations to fit your requirements.
Dollar cost averaging (DCA) is one of the most popular of all ways to purchase stocks, bonds, cryptocurrency, precious metals, commodities, and all sorts of assets. DCA came of age in the 1960s when so many individuals became active in the stock market. Today, its popularity is due to two factors: simplicity and safety. There’s only one rule for DCA enthusiasts: every month, quarter, or year, place the exact same number into your chosen financial instrument. Note that you are free to change instruments but want to keep the amount of money the same. For example, a blue-chip devotee might decide to purchase top stocks once per month, buying $500 each time. As markets and prices rise and fall, that $500 (or whatever amount you choose) buys more or less of the instruments at hand.
Putting your trading capital into micro-cap or even penny stocks is a strategy that has brought huge numbers of potential investors into the market. Many of them might not ever have become involved if it weren’t for the low cost of entry. Consider the fact that you can purchase 100 shares of a $2 per share stock for only $200 plus a small commission. The explosion in this niche took place in the early 2000s when discount online brokers arrived on the scene. At that point, anyone with a couple hundred bucks and a computer could get in on the action. A niche within the niche is small cap investing. Small cap folks tend to focus on firms with capitalization between $300 million to $2 billion. Keep in mind that share prices are not always low, but usually are lower than typical large cap issues. One of the key advantages of this approach is the room for growth. Older, mega-corporations seldom see large percentage increases in their per-share prices. Small caps, on the other hand, have the potential to rise significantly.
Day trading is a world unto itself for numerous reasons. First, day trading for beginners is one of the hottest topics in the entire field of investing these days. Books, video tutorials, and webinars on the topic draw many enthusiasts who want to learn the trade. Another thing that sets day traders apart is their total reliance on short-term profits, namely within a single market session. Some do specialize in the type of sector of issues they purchase, but most don’t. They’re happy to grab a few dollars off of any short-term price change regardless of what the name of the issuing corporation is.
A number of books published in the 1980s drew attention to growth companies. These organizations are ones whose financial environment is completely geared toward long-term growth. Those who invest in them are not concerned about short-term profits. Many retirement funds and individuals who aim to build wealth for their later years focus on growth issues. The goal is capital appreciation at the expense of everything else. The style is considered relatively risky because many of the companies with the most room for growth are quite small and have untested management teams. However, the potential is what lures so many people into the growth niche. In fact, several financial advisors specialize in helping their customers identify and evaluate corporations that display telltale signs of high growth potential.
If you’re one of those who want an immediate return on your dollar, consider companies that pay regular dividends. This is another approach that’s been around for decades. Since the 1920s, many of the world’s largest corporations have been consistent dividend-payers, often sending quarterly checks to stockholders. Tax treatment can get tricky if you are a dividend enthusiast, but millions of people have made this strategy the focus of their portfolios for many years.
If you’re hunting for a very simple way to park your money and watch it grow, consider one of the most popular set it and forget it systems around. The blue-chip method is so simple because your universe of choices is relatively small: companies in the elite category. Most have been around for a long time, demonstrate excellent financial stability, have solid management teams in place, and act as bellwethers of the entire securities market. Blue-chip devotees like a safe play but have trust in the general long-term health of the economy.