The Fastest Way to Make Money in Stock
The stock market is an inherently volatile place to invest your money for a couple reasons. First, businesses are constantly competing with another, and the rise and fall of businesses is reflected in the market, which could mean a fast rise or fall in your investments. Second, stock markets are not necessarily rational, with trends in stock often having more to do with investor confidence than actual business performance. Nonetheless, investing in the markets is a potential way to make fast cash.
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Volatility and Opportunity
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Stock markets are a highly volatile place to invest your money. Aside from the risk (or opportunity) that businesses can rise or fall quickly individually (e.g., Apple and Microsoft can either rise or fall), entire industries and the entire stock market can occasionally rise or fall together. For example, the U.S. economic recession from 2008 to 2010 followed a boom in the housing market. However, the greatest opportunities go hand-in-hand with the greatest volatility, meaning investing in the most volatile parts of the stock market will often provide you with the fastest and highest yields.
Penny Stocks
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Stocks that are worth under four or five dollars a share, also called penny stocks, are volatile, but can also bring in a hefty return on an investment. For example, a $100 investment in a stock priced at $.02 a share doubles at $.04 a share and quadruples at $.10 a share, meaning that one smart penny stock investment can give you a hefty return; nonetheless, it is worth noting that the vast majority of penny stocks fail.
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Individual Stocks
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Many investors pick and choose an individual stock within an industry that they understand and "go long," meaning they choose to keep their investment with that company for at least five years. Choosing a cheap individual stock (at least cheap based on your overall amount of investment cash) and buying up a ton of shares of it is one way to potentially strike it rich in the market and substantially benefit from incremental gains in the stock.
Shorting Stocks
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Shorting stocks is another risky way to make a lot of money quickly in the markets. Basically, shorting a stock entails borrowing a stock from one investor and selling it to another investor at the current price, and paying back the initial investor with new stock once the stock price goes down. The danger with shorting stocks, however, is that the price might not go down, and you will still need to provide the same new shares of the stock (even at a higher price) to the initial investor you borrowed from.
Commodities and Energy Futures
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Commodities and energy futures trade in foods, energy, metals and other basic goods. These markets are also volatile, but offer substantial upside since they tend to follow broader market trends. For example, leading up to the price spike of oil at $147 a barrel in July 2007, investors were able to make a killing investing in the oil futures markets and related energy stocks. The futures market essentially allows investors to trade ownership in commodities based on speculations about the value of those commodities in the future.
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References
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