Stock Investment Strategies
Investors generally have two major investment strategies: growth investing and value investing. Most people use investment strategies that combine both growth and value investing.
Not surprisingly, growth investors look for growth companies as described in the previous section. Often they look for stock prices that are shooting up; that is, they look for momentum (otherwise known as forward movement) in these stocks. The stock prices may be high compared with the earnings of the companies, but growth investors don’t care.
Growth investors also tend to trade a lot of shares in and out of their portfolios. They keep an eye on their stock prices and sell their shares as soon as they see slowing growth in the companies in which they have invested.
Value investors sometimes look for stocks that have fallen on hard times, and therefore are relatively cheap compared with their prior prices. They also look for stocks that have been overlooked by other investors for one reason or another. In other words, they are looking for a bargain and hoping to buy shares before prices go up (when more people realize that the stock is a bargain).