Seven Different Investing Strategies

There are over 5000 publicly traded companies. But how do you figure out which ones to trade or invest in? I will show you several good investment ideas (plays) to consider.

You can buy shares of a company that is reportedly going to buy back its own shares. This is simply called a buyback. Buybacks are good because the company buying back its shares shows the confidence of its board in the future of the company. Investing in companies that buy back their shares usually prove to be superior investments.

You can find a company that is a good candidate for takeover by another company. Frequently, the share price of the company being acquired will rise, while the acquiring company's shares will usually decline.

You could also invest in a small cap or micro cap company that you believe could increase in value. The reasons to be optimistic about a small company's future could be a rumor the company is about to become profitable or to receive a contract. There could be significant insider buying, which is frequently a good sign. You could also choose to invest in a company because of increasing earnings.

Another strategy you could try is a dividend play. An above average dividend yield is a sign that a company is in good financial shape. Dividends can be cut, however. You could buy shares of a company that's dividend has increased over the years. If such an investment pans out, you could profit from both growth and income.

Selling short could be an option for you too. If you know of bad news looming for a company, selling short may be the thing to do. Watch for signs that a stock is way overpriced, like a high P/E ratio.

Look at changing demographics for investment ideas. For example, look at the aging of the U.S. What will the Baby Boomers likely spend money on in the next ten to thirty years? This should give you several ideas, including: healthcare, retirement centers, entertainment, leisure, and travel. You will have to hold on to these types of shares for some time to really profit.

Last, I will talk about value plays. If you see the shares of a company that you like is really getting battered, but you believe that things will turn around for the company eventually, consider buying shares. This sounds easy, but investors, and the family and friends of investors frequently see such an investment as suicide. But this is how Warren Buffett of Berkshire Hathaway has invested throughout his career. Buffett buys quality companies while other investors are fearful.

In conclusion, try to use what you know about the economy, and the companies you know about to earn profits in your investments. If you need more help, hire a well referenced stock broker, and start reading the classic investment books.

David K Drews runs http://www.independentwealth.us , a site you want to visit if you want out of the rat race. The investment books I recommend are listed inside.