Investment requires prudence. Whether the amount is small or big, you need to have complete information about the place or field where you are going to invest it. Investment is most often made with a purpose to accrue good returns in future. Investment is like a source of income where initially you put in some capital and expect it to multiply or boom in the near future. There are various types of investments nowadays and different strategies are associated with them. Investment can be in the field of property, land etc., in the stock market, in bank in the form of fixed deposits, in commodity trading, in trusts and insurance policies.
Let us know from the example that a non-technical trader can understand. When you move out to invest say for instance in property, the strategy of buy for low and sale for high prevails. In the language of investment this is called the ‘arbitrage’. What you require first of all is a perfect idea of the fluctuating market. When the market value is low, make as many purchases as possible. When the market as you assessed picks up pace, sell whatever you purchased at simply double the price. This profit however is not possible without a vigilant study of the market. An investor who has scrutinized the market from top to bottom predicts the highs and lows of market and makes purchases much before the onset of the profit season. Smart investors use all forms of online utilities to invest in stock market. They keep track of their daily stocks on trading apps. Stock trading app offer investment opportunities for commodity trading, futures and options, equity and mutual funds.
Arbitrageurs are very smart nowadays. In order to incur huge benefits, for example, they even go about purchasing some very archaic piece of furniture or property from a low price market, invest a few more bucks in its renovation and then sell it in an expensive market or put it up at auction on the internet.
There are times when massive investments are being made in one area, this is known as the ‘market bubble’. Take for example, if a piece of land in a specific area is inviting too many buyers and that too with unbeatable profit, there is a horde of investors to purchase land in that area and sell it for the maximum possible. Similar is the case with the stocks of a company that is giving brilliant dividends to its stock holders, if the company lowers even a single dollar on its stock, multitude of people gratify their desire to receive excellent gains later. You need support of an expert broking company to identify such valuable stocks. You can invest online in different stock options after knowing demat account opening procedure.
- Related to this is the ‘value investment’. Here the investor estimates the value of the company in the form of its returns. If a company has a good record with its shareholders and its shares are relatively at a lower price in the market, the investor will purchase maximum shares as possible since he is confident of the company’s value. The investors basically peep through what is visible in this case. Many companies only flaunt to be successful in the market but actually they have been charged with many illicit proceedings. While there are companies that make a slow and simple start and scale new heights gradually. The investors are in search of these types of companies, the ones that are not feigning to be great.
This is how fluctuations and company valuation ride the market.