It’s time to beat the market

It is all about studies and research when it comes to being a good investor or trader. There are too many parameters to fit into one blog that might help you understand and analyze the market. Even after years of research, you will still have topics left to learn.

After spending a lot of time and money on research, investment analysts and advisors are always looking for strategies which will outperform the market sentiments at any given period of time. Most of the sectors failed to outperform the S&P500 index's performance except for Consumer Discretionary, Health Care, Financials, and Information Technology sector.

So, if the experts and fund managers cannot beat the market sentiments, what are the odds of us beating the market?

Well, even when things seem to go south, there are a few investment techniques backed by research and also time-tested which tends to outperform the market sentiments. They might prove to be a good investment and generate consistent incomes.

1. Stocks paying dividends tend to outperform the market: A study by Ned Davis Research found that dividend-paying stocks tend to give better returns and beat the market sentiment over a longer period of time than stocks who don't pay dividends.

Stocks in S&P500 that did not pay dividends gave a 2.5% annual return from 1972 through 2015 whereas a dividend-paying stock gained 7.4% annually.

1. Stocks buy-back plans also tend to outperform: Companies that repurchase their own shares generally generates higher returns. As a company buys back its own shares the outstanding shares goes down resulting in an increase in a value of its own shares even if there is not enough income.

On May 1, Apple announced a buy-back program to repurchase stocks worth $100 billion. The stock price was $169.10 during close on that day and the prices surged by 10.02% to $186.05 within a week and were up by 12.59% by the last trading day.

1. Buy and Hold strategy: Research shows that buying a stock and holding it for a longer stretch of time is one of the best ways to make money in the long run as well as it is a low-risk strategy. An Oppenheimer study shows that S&P500 never lost in the long run over a 20 year period of time back till 1950 whereas lost 16 times in the short run.

A research by Morningstar shows that if any person invested in any in 30 of the biggest rallied days in the stock market, he would have made 1/5th of the money than the person who held in throughout.

1. Dividend Reinvestment: Dividend reinvestment will help you in the compound growth. When you reinvest your dividend to buy more shares, you eventually end up owning more shares that will generate more dividends.

I’m not some investment mogul or expert, but someone just like you. Even though no strategies can give you guaranteed returns, these sets of strategies generally outperform the market. In short, you might try identifying companies that provide dividends and has regular buy-back plans. Hold your stock for a longer period of time and try reinvesting your dividends. Patience might give you a great reward after a long run.

Submitted July 19, 2018 at 08:50AM by indianleo https://ift.tt/2L6HYN8