Even though stock market is quite an open field, not everyone is able to consistently remain profitable. The stock market can indeed provide great rewards to investors who are focused and systematic. On the other hand, it can also prove to be a bed of thorns for impatient and greedy investors who do not follow the right strategy. As per Kavan Choksi, for most knowledgeable and disciplined investors, equity investing is quite a tried-and-true method of wealth creation and has a lot of growth prospects available, as long as one follows the right approach.
Kavan Choksi mentions certain effective strategies for stock market investments
Having a proper plan and strategies in place would be critical for investors looking to navigate the complexities of the stock market and achieve their financial goals. They should put emphasis on establishing standards, formulating strategies for identifying quality companies, and maintaining their discipline to make wise stock selections and earn profits.
Here are some of the most effective stock market strategies that investors should consider:
- Ignore short-term chaos: Markets are influenced by diverse effects, like fear of inflation, Fed rate hikes, banking crisis, global uncertainties and so on. However, such short-lived headwinds should not be of concern for any focused investor. They should avoid thinking too much about short-term events as their results also last for a short period of time. In fact, it is prudent to avoid making major portfolio changes in response to these transient events. Rather, investors must put their focus on creating a well-diversified portfolio that is able to withstand a range of market conditions
- Embrace volatility: Market volatility is likely to have an impact on the investor portfolio, but one must not always assume that this impact would be negative. Market turbulence can also produce opportunities that smart investors can leverage. Volatility can provide entry points for investors whose time horizon and investment plan are for the long-term. In the long run, the investors following a bullish approach and think that the markets will perform well, shall have the opportunity to purchase more shares at a discount owing to downward market volatility. Investors should accept that there will always be market volatility, and they must explore tactics ready to deal with it.
- Invest in small caps: It is important to point out that small-cap stocks have provided superior returns over the long term in comparison to mid and large caps, despite volatility in short-term performance. Corporate profitability of small-cap companies additionally may go up along with increasing economic data. Small-cap investments would be quite good option for investors who have a higher risk tolerance and expect reasonable returns. Even though small caps have the ability to offer investors strong returns, it would be a good idea to hold onto them for the long to lower the risks associated with doing so.
As per Kavan Choksi, the investment strategies or approaches mentioned above help maximize returns by identifying investment opportunities and capitalizing on them. Almost any investor can benefit by following such strategies.