Types of Investors
There are different styles and types of investors that exist
in the stock market. Investors use the stock market to build
their investment portfolio so that they can see a long term
profit that takes place over a long period of time.
Someone who is just using the stock market to
make money quickly for a short period of time is called a
"trader". Members of an investment group fall into the
first category: they are in the investment market for the
long haul.
There are different types of investors that use
different methods to analyze the market and the market
conditions.
These three methods of analyzing the market
are:
Technical
analysis. This method of analysis is used by a
"momentum" investor. Technical analysis looks at the
price fluctuations that occur in the stock market.
The investor bases the decision to buy or sell on
what he feels the price will do next.
Fundamental
analysis #1. Fundamental analysis is used by the "growth"
investor. This type of analysis decides if a certain
company is a good investment based on the earnings of
the company, growth sales, and margins of
profit.
Fundamental
analysis #2. A "value" investor uses this type of
analysis. This method of analysis is similar to the
analysis that a growth investor uses but is slightly
different. A value investor takes a close look at
those companies in the stock market that have a low
value. The investor looks at stocks that are
currently cheap and low but that have the potential
to make a good comeback.
Most investment clubs use the fundamental method
of analysis to make most of their investing
decisions.
They find companies that are listed on the stock
market that show good growth, profit, and earnings but
that are still cheap to buy and haven’t yet reached their
potential.
Members of the investment club buy this stock
and hold on to it for several years so long as the
fundamentals, as listed previously, continue to hold
strong. This type of investment strategy is called "buy
and hold".
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