There is the value investing approach and the trading approach. I prefer the value investing approach
because you don’t need to monitor the stock movements all the time. You are also safe no matter where the
market goes. It does not matter whether the market goes up or down, you will make money either way.
The value investing approach requires you to determine the “intrinsic value” of the business and then
just compare it with the existing market price. If it is higher than market price then buy it. If it is lower than the market price then don’t buy it. Simple as that. Buy it when it is cheap, avoid it when it gets more expensive than what you
calculated it to be. The hard part is that it requires you to analyze the financial statements of the company in order to gauge future performance. The information is also combined with the current economic trends plus any potential future opportunities or threats for the company’s profitability. I will detail the specific analysis of individual companies in other posts.
