Beating the Market Strategy
The goal of many investors is to beat the market. They aim to do this by using their stock investments.
Investors establish different schemes in order to beat the market, making them as secure as possible if this is possible at all.
However, establishing as a goal the beating of the market may not be enough to achieve financial success. This means that other considerations should be made.
Most investors consider the S&P 500 Index as the best result that the stock market should strive to achieve. However, the S&P 500 includes large cap stocks, which makes it a not so suitable choice in some cases.
This is so since large cap stocks don't respond in the same way as small and mid cap stocks to the influences of the market. Therefore, if you are comparing small and mid cap stocks or groups of stocks, you should establish another criteria, different from the S&P 500, toward which to measure their performance.
What is more, if an investor strives to achieve long-term growth for his/her stocks, beating the market may not be the right tactic to use.
In order to achieve long-term growth, most companies focus on investments that do have an effect in the short earnings. However, the value that is added to the stock is reflected in the long-term growth of the company's stock.
Many companies prefer to incur short term losses, but with the aim of obtaining long-term profits. Additionally, there are many cases in which companies have protected unprofitable in the short-term departments, because they see in them potential for long-term profitability.
Finally, we recommend the investment in companies that direct their activities in the achievement of short-term profits if you really want to follow the tactic of beating the market.
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- Allocating for Investing Purposes
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- When to Buy and Sell Stocks
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- Has the Time for Selling Stocks Come
- Selecting Your Investing Strategy
- Dollar Cost Averaging Benefits
- Determining the Number of Stocks to be Included in Your Portfolio
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- Constructing a Successful Stock Purchase Plan
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- Stock Portfolio Balance Maintenance Techniques
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