COVID-19 has given investors a unique opportunity to capitalize on the stock market. Investing is a complex endeavor, but can be made simpler with the right strategies. To maximize profits, investors need to be diligent and plan ahead. One way to do this is to focus on three stocks in three different phases.
The first phase of investing focuses on large, established companies whose share prices may not be affected by economic or industry fluctuations. This type of investment provides stability and a good chance of capital growth over the long run. Companies in this category include Microsoft, Amazon, and Apple — all of which have proven their value and are widely held.
The second phase is the cyclical stock. Cyclical stocks cycle up and down with the business cycle. These companies generally offer more potential gains, but there is also more risk. Examples of cyclical stocks include airlines, auto manufacturers, and oil producers.
The third phase is for higher risk investments such as penny stocks. This type of stock is highly speculative and is not suitable for everyone. It is important to do the appropriate research before investing in penny stocks, as certain stocks can have explosive growth while others can be too volatile.
Once investors have identified the three stocks they want to invest in, they should determine their targets. This should be based on the amount of risk each person is willing to take, the total return they expect, and the timeline of the investment. It is important to ensure that the three stock allocations reflect the risk/reward profile an investor is comfortable with.
Finally, investors should monitor their investments and rebalance their portfolio if their targets are not being met. What worked for one investor may not work for another, so investors should be willing to adjust their allocations as needed. By following these steps, investors can maximize their profits and increase their potential to succeed in the stock market.
