Money Making Ideas

Investing in stock is a something we should all consider as another one of many money making ideas. The stock market is a giant river of money that is available for anyone to dip into if he or she would like. Stock investment is not difficult to make a lot of money, but it does take considerable work to achieve success. Also, it requires mastery over one’s emotions; one needs to act with his or her head, not feelings.

Two Schools of Stock Investment

There are two schools of stock investment: fundamental analysis and technical analysis. Although neither one is superior to another, they differ from each other greatly and will achieve different results. Fundamental analysis deals with businesses; technical analysis deals with trends. A fundamental analyst will pay attention to things such as company financial statements and management to make education predictions about the future of the stock price, while technical analysts look at the market trends and overall economy to make educated predictions about the stock price.

They both have very different results. Technical analysis is a very short term method; if one uses technical analysis, he or she must be prepared to trade in and out of different stock quite frequently. Technical analysts earn their money through trading, which can never be stopped; if it is stopped, then income generally ceases. Fundamental analysis, on the other hand, is a very long term approach to stock investment; if one uses fundamental analysis, he or she must be prepared to hold on to a company’s stock for a very long time, even when the stock is dropping to levels far below what it was bought at. Fundamental analysis generally results in residual income; when a fundamental analyst stops investing, his or her income will generally continue.

While most investors consider neither method superior, it must be noted that fundamental analysis is practiced by the world’s richest man, Warren Buffett. Warren Buffett himself does not approve of technical analysis and thinks it a silly practice. Technical analysis is like poker; a player can improve his or her luck dramatically with skill, but there is a certain, unchangeable element of chance that always gets factored into the game. It is true that there are always elements of chance with fundamental analysis as well, but there is no limit to this; fundamental analysis has the ability to manage risk and reduce chance’s effect on the investment results. For this reason, here at Many Money Making Ideas, fundamental analysis is preferred.