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Investing for Stock Market Returns

Everyone who invests in the stock market does so to increase the return on their money. However, you may be asking yourself the question of how you can increase your stock market returns. The first thing is that you need to remember with your investing strategy is that the point of investing should be to beat inflation. Those investors who try and hit the home run usually end up striking out. Most investors need to realize that the best reason to invest is to grow your money consistently. The stock market will experience ups and downs, but the overall trend of the market will be up. With a proper investing strategy, you should be able to beat the inflation monster.

If trying to hit the home run is the first mistake that investors make, the second mistake is not diversifying enough. You need to make sure that your investments have the proper asset allocation. With the correct asset allocation, some of your stocks will go up when others are going down. You will also be able to diversify your way to higher returns with lower risk.

Another suggestion for your investing strategy is to realize that bear markets do end. Many times the bear market will end before people realize it. I remember during the last recession, we were six months out of it before the economists announced we were out of the recession. You need to watch the signs of the times to see the trend. Make sure you are invested in the stock market when it goes up or you will miss out on the opportunity.

One of the ways to identify the end of a bear market is a contrarian method. The viewpoint is that if the consensus view of investment advisers is gloomy, then it is time to get into the market. Another identifier is when the market stops falling on the announcement of bad news. There is a theory that states that most of the weak sellers have sold out, and the market will not react any longer to additional bad news. Investors will merely shrug off the bad news. The beginning of an increase in IPO's is another sign that companies are getting good feelings of where the economy is going.

Also watch for articles discussing the sentiment of the company's accountants. If the accountants have a good feeling about the timing to begin spending again, then it can be a sign that things will improve in the next six months. The accountants are the ones who will decide it is time to begin purchasing and hiring. They are a conservative bunch, so if they feel good, then you can feel good also.