How To Maximize Profits By Investing In The Stock Market

There are 3 things you need to know if you want to maximize how much money you make investing in the stock market:

1)  WHAT stocks to buy  2)  WHEN to buy and 3)  WHEN to sell

You must know all three to make the most money.  If you are missing any one of these, then you cannot maximize your returns.  Or worse, you could even lose money.

Of these three, knowing what to buy is by far the easiest.  There are a lot of good stocks out there that will make you solid returns over time.  For example, in the past four years, ten of the thirty stocks in the Dow Jones Industrial Average have tripled!  That is one-third of the index!  With just a basic understanding of what drives stock prices, an investor can choose more of the stocks that will give this type of return.

The other two — when to buy and sell — that is where most investors get into trouble.  Looking  back, we can see that you could have bought almost any stock in 2009 and have made a profit by 2013.  Many have doubled or tripled.  As long as you didn’t pick some deadbeat penny stock, nearly all stocks have gone up since 2009.  But it would have been terrifying to buy back in 2009 after a horrible drop in stock prices in October 2008.  I was working from home at the time and was thankful I was not in the markets at the time.  I knew that other people, both amateurs and professionals, were experiencing a freakish hell as the stock market crashed.  However, if you know what to look for, you can make a reasonable estimate and buy somewhere near the bottom for a fine profit.

The hardest of the three is knowing when to sell.  Let’s say you have a nice profit in your stocks.  You don’t want to sell too early if stock prices continue to climb.  On the other hand, you don’t want to lose your profits if the market is headed for another bear market that wipes out 25-50% or more of your profits.  There are ways to know that the bull market is likely going to end soon, and signs that it has very likely already ended.  Like I have said before, a little knowledge goes a long way in the stock market.