How to Beat The Stock Market
Anyone can buy stocks, but it takes something special to beat the market. Trying to beat the market is a risky proposition. If you are in the lucky few, however, it may be worth it. Here are some strategies for those willing to try.
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Instructions
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Invest in high-risk stocks such as international companies, volatile markets or small companies to earn a higher return.
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Use technical indicators to buy stocks for short term gains and sell them right away. This practice is called day-trading. Be careful because short term gains have higher tax rates.
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Invest in value stocks. If you have a longer time horizon, you can buy undervalued stocks now and hold them until they achieve their full potential.
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Use speculative methods of trading such as options, futures and short-selling. These techniques require advanced knowledge and a high-tolerance for risk.
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Consider other means of investing, such as real estate and starting your own business or franchise. If you can expect to gain more from investing in these areas, there is no reason to invest in the stock market.
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Hire someone to beat it for you. Every investor can afford mutual funds. Wealthier individuals can hire personal advisers, join hedge funds or contribute venture capital.
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Buy the market. Some economists say that it is impossible to beat the stock market. If you agree, buy an index fund. If you can't beat the market, buy it.
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Tips & Warnings
You are getting paid to take risks. If you get a bigger return than the stock market does, you took a bigger risk.
Don't use information that is not available to the public to profit on the stock market. This is called insider trading and will cost you fines and possible jail time. Just ask Martha Stewart.
