How to Make Money in Stocks

Sam Elfeky

June 20, 2022

How to Make Money in Stocks – Osama Sam Elfeky

According to Osama Sam Elfeky, if you are interested in learning how to make money in stocks, then you have come to the right place. You can learn the basic principles of stock investing, including the Buy-and-hold strategy, Dollar-cost averaging, and investing in quality companies. You will also learn how to avoid market bubbles. Investing in high-quality companies is one of the best ways to earn a profit. Here are five key strategies for success:

Buy-and-hold strategy

The buy-and-hold strategy has been a popular investment strategy for many years. This method involves buying an investment, holding it indefinitely, and not trading. This strategy is a solid choice if you want to invest for the long term and avoid the hassles of active trading. As long as you are investing with a disciplined approach, the returns you receive may be hundreds of times your original investment.

The buy-and-hold approach is not for everyone, however. The concept of buying and holding is appealing on its face, but it can be challenging to follow. Many investors fail to follow this method for various reasons. For instance, if they do not have a high risk tolerance, they may have a hard time keeping their investment portfolio balanced and will likely lose money. This strategy also requires discipline and a high level of emotional resiliency.

Dollar-cost-averaging strategy – Osama Sam Elfeky

A dollar-cost-averaging strategy to make money with stocks helps you invest more money in smaller amounts each month. This strategy is particularly useful in market downturns when you may be tempted to sell your stocks to make money. But if you stay the course, you will be able to benefit from the market’s downturns. By making consistent, smaller investments, you will be able to maintain your investments throughout the market’s ups and downs.

The benefits of using the dollar-cost-averaging strategy for investing in stocks are many. One of the benefits of averaging is that you’ll reduce your overall cost per share, especially if you buy more shares when the price is low. This strategy is especially attractive to new investors, as it allows you to build wealth gradually. For instance, if you invest $500 in mutual fund XYZ every month, you will end up with 135 shares, which is equal to $878. After five months, you’ll have made a profit of $378.

Investing in high-quality companies

The Leuthold Group, a Minneapolis research firm, has discovered that investing in high-quality companies can lead to higher returns than low-quality stocks. Its study found that over the last 28 years, high-quality companies have outperformed low-quality names by an average of 13.1% a year. In contrast, the Standard & Poor’s 500-stock index gained only 10.6% a year. While the term “high quality” is imprecise, it is usually associated with low or no debt. For example, Apple and Berkshire Hathaway B are on the current list of high-quality companies. Colgate-Palmolive has a similar list, and so does Costco.

Investors can choose high-quality companies by using a growth stock screen. Growth stocks are those that trade above $10 per share. Funds have more capital to deploy, so a high-quality company can be a good place to start. While growth stocks have a low price range, concentration is key. Companies that are trading above that price can increase their earnings dramatically. They may be smaller than large, but high-quality companies typically pay higher dividends and are more predictable.

Avoiding market bubbles

Investing in the stock market can be a very profitable endeavor if you know how to avoid market bubbles. Market bubbles occur when prices of stocks and other assets are rapidly rising above their true value. Market bubbles can occur in a variety of asset classes, including stocks, real estate, commodities, and technology. These irrational price increases occur when more people are investing in a particular asset, causing prices to spike out of proportion to the real value.

Market bubbles can lead to widespread economic and financial downfall, which is why understanding the causes of them is so important. While a rising market is attractive for investors, it can be unhealthy for the economy, resulting in a stock market crash. A widespread bubble can indicate that a market is approaching a peak, which means a potential downturn is just around the corner. People who were late to the game and sold their stocks could suffer substantial losses if they didn’t sell their investments.

Avoiding high-volatility stocks – Osama Sam Elfeky

Avoiding high-volatility stocks to maximize your returns is an excellent way to limit your risk and minimize the size of your losses. Although high-risk stocks may bring more immediate returns, they can severely damage your portfolio over time. Therefore, it is best to stick with low-volatility stocks, which generally offer steady returns. Here are some examples of low-volatility stocks:

If you’re a buy-and-hold investor, avoid investing in high-volatility stocks. But if you’re a tactical investor, don’t dismiss the idea. By analyzing the betas of S&P 500 stocks, you can decide which ones have the highest volatility. Beta is an indicator of volatility, and is a good proxy for risk. However, it’s best to avoid high-volatility stocks unless you have a longer investment horizon.