Posted on 08 July 2012.
The secret to making money in the stock market is actually a lot simpler than most traders and investors realize. Once you understand the secret to making money in the stock market, an investor will no longer need to try to use complicated formulas and strategies to make money in the stock market.
The first secret to making money in the stock market is finding hot stocks and hot stock sectors that have high earnings growth rates and stay invested in them until their growth prospects change. Earnings growth is what causes stocks and stock funds to move higher. Finding the stocks and stock funds in the highest growth sectors of the stock market is a good way to increase one’s chances of making money in the stock market in any given year.
The high earnings growth stock market money making strategy works well during bullish stock markets, as high earnings growth stocks and stock sectors routinely lead the stock market higher. Of course, the secret to making money in the stock market on high growth stocks and sectors also includes knowing when to take profits when growth prospects diminish, Reload and wait for the next high earnings growth hot stocks or stock sectors to present themselves as the next stock market money making buying opportunity.
The second secret to making money in the stock market involves buying stocks that consistently pay dividends in good markets and bad. Dividend paying stocks are not usually high earnings growth stocks, although they can be, such as is the case with Apple Inc. (AAPL). Dividend paying stocks make money for long term stock holders who are willing to ride out the stock market’s ups and downs and collect dividend payments along the way, which over the years can add up to significant stock market gains, even if the broader stock market is flat to slightly down over long periods of time.
The first secret to making money in the stock market presented above is more suitable for stock market investors who have the time and the aptitude to follow stock market developments and seek out high growth stocks and stock sectors. The second secret to making money in the stock market is the preferred choice for stock market investors that are more conservative in nature and would rather make money in the stock market by collecting dividends, rather than trying to find and ride up the high earnings growth stocks and stock sectors.
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