I'm currently studying finance in uni and we're taught portfolio theory and that diversification works well in reducing risk. However I don't believe in this as it is all theory. Does anyone know how and why some investors can make huge returns by just investing in one stock w/o diversification? How can they predict if a share price is going up w/o having insider information?
2007-08-20 03:42:45 · 2 answers · asked by Anonymous in Business & Finance ➔ Other - Business & Finance
I'm surprised there has been to answer to this question for 6 whole days. Goes to show how selfish the finance herd is today.
2007-08-25 21:57:51 · update #1
The problem is not selfishness; it is their is no real answer to your question.
I will attempt to give my opinion.
Many high rollers have the knack of using other peoples money to grow their own money.
They still have to do some real ground work (hard research) to pick a portfolio.
They have to watch their investments 24 hours a day and not be afraid to unload an investment that appears to be going down the drain with little chance of recovery.
Buy low and sell high
Many investors see an investment increasing; watch it for a while; then buy into it.
By the time they do this, many times it is near or at it peak and starts to plummet.
You have to invest in some safe companies (commonly called Blue Chip Companies) to keep your investments stablized. These companies you keep even if the investment drops - it will recover in most cases.
Invest in some moderately risky companies.
Use spare money to invest in high risk companies.
Do your homework first and be aware of local, national, and world trends that can affect the direction of any of your investments.
Be wary of get rich schemes. Ninety nine percent of the time they are scams.
Good Luck - research, research, research, and be on the lookout for scams.
2007-08-27 05:13:08 · answer #1 · answered by Comp-Elect 7 · 0⤊ 0⤋
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2015-01-27 00:39:13 · answer #2 · answered by Anonymous · 0⤊ 0⤋
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2007-08-27 02:47:13 · answer #3 · answered by Anonymous · 0⤊ 0⤋