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Most people I speak to tell me that investing in the stock market is risky. Some have lost a lot of money investing in stocks and swear they will never touch stocks again. I’m not surprised to find that actually, they lose money not because of the volatility of the market but mainly because their fundamental strategy for investing is flawed. They ask the wrong questions, like which stock is going to fly then enter the market based on tips, news and speculation. They seek short term gains. They don’t do their own study because they really have no idea how to do it. They’re the same ones who brag about how much money they make, become greedy, then end up losing big. No wonder they find that investing in stocks is risky! The Value of Investing The way I invest in the stock market is the Warren Buffet strategy of Value Investing. In Value Investing, we ask the right questions and make our decisions from a Business Point of View. We only buy a business when it makes business sense to do so. We are not traders, we are investors. In the stock market, there are two types of businesses for purchase – Healthy and Sickly Business. Healthy businesses perform well and earn good consistent profits for its owners. Sickly businesses produce sickly profits that are poor and erratic. When times are bad or when economic conditions are unfavorable, both Healthy and Sickly businesses will fall ill. Their earnings may drop sharply, stock prices will fall. You have a perfect opportunity to turn times of crisis into opportunities by buying the stock of healthy businesses at low prices during this time. Healthy businesses have a higher chance of recovery and when they do, they will continue to perform, recoup their losses and earn good profits for the owners. Sickly businesses on the other hand may not recover from bad times. Even if they do, they will continue to do poorly and produce anemic results. The real key to success is having the ability to differentiate between the 2 types of businesses. The Fundamentals The first thing to understand is that all businesses exist to provide value. They have customers who are willing to exchange their money for the value their product or service provides. Some provide basic needs like food, clothes to luxury items like jewellery. Healthy business are able to not only survive, but thrive in the highly competitive market. They have something unique that keeps existing customers coming back for more that is not easily duplicated by the competition. This is the “Economic Moat” that protects the business and figuratively speaking, the wider the moat, the stronger the business. It’s not difficult to identify these companies, you simply need to know what to look for. What indicators you need to be aware of, what questions to ask. You need a system for Value Investing and that’s what we want to share more about at the Wealth Summit. Success Resources: http://www.srpl.net/
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