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When we talk about investment you would have come across the word portfolio. But what exactly is a portfolio in layman’s English? A portfolio is actually all the stocks you have acquired for a particular purpose. Investors buy stocks for different reasons like,

Retirement purpose:

If you are planning to retire from work in 10 years from now, The question you should asked yourself is what exactly will be source of your income? do you want to live on government welfare or do you want to invest your money in penny stock which in 10 years from now will be a blue chip company or do you want to live on dividend you get from your portfolio etc.

For the purpose of a will

A will does not mean you are going to die now but it shows you your asset an what you have been investing your money in. It is good to have a will because you are actually planning for your family and each member of your family will know the stocks they are going to inherit from you.

For vacation purpose

Another reason for planning a portfolio is for having vacation in different vacation spot in the world. If you intend to go to Hawaii with your family in December for chrismas, you need to start planning for it by January on the kinds of stocks to buy which will give you maximum returns from your investment.

For the purpose of getting a car

I know a father who started buying a particular penny stock for his 13 years old son. The father knew that the son will need a car at age 18. So he started investing his money in stocks and on the day of his son 18 years old birthday, he gave him a brand new car. This was possible because he had a goal and acted on his plan.

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A lot of investors loose their money for different reasons but to stay on top of the market you have to be a knowledge investor. The question you will ask me is that who is a knowledge investor? A knowledge investor is someone who understands the stock market. He is willing to read books and articles on investment, he goes for investment seminars at least twice in a year, he takes into consideration the news and the events particular to the stock exchange. The reason investors loose their money could be as follows;

Greed

If you buy a stock for $5 an your goal is capital appreciation and you set your exit strategy for 100% returns on investment, then you have to discipline yourself to sell the stocks at $10. Always act on your exit strategy if you want to be an intraday trader

Lack of investigation;

Before buying a stock always investigate about the stock. Find out the last time they release their earnings result, the current price compared to the 52 weeks high, management, product creation if there is any, the latest news and reports coming from the company, the quarterly result etc.

Buy stocks during the bearish period;

The best time to buy stocks is when prices are low and current global financial crises are an opportunities to buy stocks for long-term purposes. The reason why the bearish period presents itself as an opportunity to buy is because most of the listed companies are selling far below their 52weeks high.

Lastly holds on to stocks during the bear don’t sell;


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Due to the current global financial crises, most investors are selling their equities to minimize their loss but every challenge is actually an opportunity for a great stock trader to take position during this bear period. The qualities I will like to consider which most great investor demonstrate are boldness, patience, abilities to recognize opportunities and take actions.

Boldness

Most great stock traders are bold and are willing to take calculated risk when others are trying to bail out of the stock market. The reason they take calculated risk is because they know that the stock market has two significant periods which is also known as the bullish market and the bear market. The bullish market is when most listed equities appreciate in price while the bear market is when the prices of equities fall. Great investors recognize that the best time to buy a stock is when it below it 52weeks high which leads me to my second point.

They recognize opportunities

Most great stock trader recognizes opportunities and they act on their decision during the bear period because they follow the principle of buying low and selling high. They are able to maximize their profit using this principle. Since fundamentals determine the response of the market, they do their research on the earnings of the companies released to the market. They consider the profit after tax of the companies and also the quarterly result release to the public. If the earnings release to the public is positive and the profit after tax is positive, they will mandate their broker to buy the stocks.

Patience

Another important principle is patience. The ability to wait patiently for the bull to return back to the stock market. In some cases like penny stock ands some blue chip companies, you take your profit the same day, while in some cases you might have to wait for 3 month or 6 month before you can take profit or receive returns on your investment.

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For you to decide the best time to buy a stock during these global economy crises you have to have a plan in mind. And I will like to categories this plan into 3 important investment objective which are short term investment objective, medium term investment objective and long term investment objective.

Short term investment objective:

Short term investment objective refers to a period of 3 month and below. By this I mean if you invest your money in stock market now you are actually expecting returns on your investment in less than 3 month in most cases if you are an intra day stock trader you can actually receive your returns on investment the same day. Some penny stocks actually give you 500% returns on investment in the New York stock exchange.

Intra day traders are short term trades because they are motivated by profit or price appreciation .For you to be a great intra day trade trader you must follow the rule of buying low and selling high which is a strategy common to most stock trader. A good time to buy stocks is actually now because most of the listed equities are selling below their 52 weeks high. And they are also posting improved earnings to the stock market on a daily basis.

Medium term objective:

Medium term objective refers to 6 month to 12 month investment plan. You are actually expecting to receive returns from your investment in less than 12 month. The investor usually takes position during the first quarter earnings release by the company and expect to take profit by the 3^rd quarter or 4^th quarter of the same year. The risk involve in medium term objective is not as high as the short term plan.

Long term objective:

Long-term investment objective is actually referring to 12 month and above.

This investment objective is not has volatile like the short term plan and it is less risky.

Most portfolio managers prefer this option because of the long term perspective of 12 month and above. By the time you think through this 3 important investment objective,

You will be able to decide when and how to trade in stock.

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