The most difficult thing about stock investment is to maintain rationality and logic, especially when you see that other people's stocks have been increasing in value, while your own stocks keep falling, even if you buy stocks of better developed companies according to the advice, but still have losses in the long run, this is because you do not understand the principle of making money from stocks, so you should have some understanding of the origin of the stock market, and study where the money earned in the stock market actually originates from, and It is necessary to study where the money earned in the stock market comes from and which part of the money we should choose to invest. The profits we earn from investing in stocks are made up of a combination of three main components, which are described and compared below.
The first part: the growth part of the enterprise value
This part of the profit is the result of the growth of the value of the company, so we should buy companies that have potential and have a good growth trend. Investment experts once said, "When making stock investments, investors should see themselves as a business analyst, not as a market analyst, macroeconomic analyst or securities analyst." Choosing a good company is what makes sustainable development and value growth possible, and we as holders of this company's stock can enjoy the benefits in the long run. When a company grows in value by an average of 20% throughout the year, then it can be called very good, so take into account the factor of time when investing, do not be confused by the short term growth rate, a company's value growth needs time to settle, to study the development of the company for a year or many years.
Part II: Buying stocks that are valued by the trough
The stock market often has fluctuations that go beyond logic, and every once in a while there is a style of stock that suddenly grows, while there are also stocks that will become cold stocks for various reasons, whose share prices are below the company's value, especially when the overall share prices are on the downside, and most companies are undervalued. If you can buy such undervalued companies at this time, you will have already made money at the time of purchase. The above investment method is the reverse investment recommended by many investment experts. And from the perspective of human nature, to be able to invest rationally from fear still, is enough to prove that you have mastered strong enough investment ability.
Part 3: Sell the market high premium stocks
When the stock market is rising at a high rate, or the stock you purchased suddenly becomes a popular stock, then the value of your stock will be overvalued, attracting a large number of other investors to buy your hand at any cost, at this time is able to obviously directly get the profits in hand are time.
Through comparison, it is found that the most stable way to earn profits is still by earning the growth part of the enterprise value, not being confused by some short time fly-by-night profits, and then trying to do lower purchase price, you can maintain a high profit status in the stock market for a long time.
