Home
Terms - Investing
Vote And Share
Calculators
Wise Igor Ansoff
Other Articles
WEB SITE CHAT
Beginner Investors
Value Investing
small cap articles
Mid Cap Stocks

abnormal return - investing in the stock market



Talk about stocks with potential abnormal returns These type of returns happen when a given investment usually stocks is outperforming or under performing what it is expected to make over a given period of time depending on market conditions and what exactly the stock is made up of. Depending on what the investor has invested it high returns can be good if it's going up or bad if it is going down however EXPECTED RETURNS can also be bad in the stocks that you are buying are performing as expected downward.

monopoly companies

dieing auto industry

Comments:

I think that looking at massive returns in your portfolio is important however you must also think about risk vs. return in investing. You can sometimes gain a huge return but if the amount of risk you are taking exceeds what is reasonable that you can't expect those same huge Gaines to happen in the future. For instance if you just bought a penny stock that was two cents and it goes to eight cents you have just have a 400% gain which is very unusual but probably will not continue in the future with a similar purchases of risky stocks. One of the things investors should look at is how to maximize return with the smallest amount of risk possible. One of the ways of generating abnormal returns is simply buying in a fashion that is not normal. This does not mean buying off the wall stocks but rather buying the BEST companies when most people are selling. The stocks should also pay a dividend allowing the good stocks to pay off and thereby compound. One of the rules of buying smart stocks is making sure that they are compounding which means paying interest on interest investing in the stock market.