Many investors swear that it’s impossible to beat the stock market, but is that actually true? While it’s okay to be skeptical about outsmarting a market that baffles even the savviest fund managers, I’m here with a contradicting finding. Beating the stock market is very much possible, and if you want to see your stock market returns outpacing popular market benchmarks then pick up a strategy that guides you on what stocks to buy and how to time the market for maximum returns.
Now, even though there’s no fail-safe way of doing it, there are proven investment tactics that have recorded an impressive track record of success and there are the top 3 I think you should know!
Method #1: Investing In Cyclical Investments
The first strategy you can use to outsmart the stock market is to bet the ranch on cyclical investments. For beginners, cyclical investments, are those whose growth rates witness see-sawing changes depending on how the economy is performing. These types of stocks heavily depend on the fluctuations of the economy. When the economy is on an upward trend, these stocks will perform stunningly. Conversely, when the economy is undergoing a downturn, these stocks will also take a dip, hence exposing investors to stinging losses.
Companies whose stocks are labeled as cyclical are those that suffer the beatings of an underperforming economy. These companies primarily sell goods and services that buyers can easily scratch off their shopping lists during tough times. Think restaurants, airlines, automobiles, hotel services, and luxury designer clothes. No, doubt, these are things you and I can correctly do without.
On the other hand, non-cyclical stocks, those whose growth rates remain relatively stable, economic performance notwithstanding. These companies are so immune to economic changes that they’re bound to siphon profits even in a tumultuous economic climate. Typically, companies that fit this category sell necessities such as food, real estate, and essential household utilities like soap, toothpaste, and electric power. Usually, you wouldn’t find someone postponing a bath for months until the economy picks up, right?
However, while the defense of non-cyclical stocks is undeniable, there are…