If you are looking to make money in the stock market you need to prepare. You need to develop a plan and you need to pay attention. Assuming that you learn the ropes and apply yourself how much money can you make investing in the stock market? Here are a few examples.
A Million Dollars Trading One Stock
Our sister site, ProfitableTradingTips.com published an article 5 years ago, How to Make a Million Dollars Trading One Stock.
How to make a million dollars trading one stock! This is a great idea if you can do it. Evaluating how this could be done is a good exercise in various methods of trading. How to make a million dollars trading one stock could be relatively easy if one had one hundred million to invest and only needed to make a little over one percent return on investment with your trade in order to keep the million dollars after fees and commissions. For most of us in the real world how to make a million dollars trading one stock will have to start with a substantially smaller investment pool, stocks with significant room for appreciation, and finding ways to leverage our investment. Many learn how to trade penny stocks with this sort of goal in mind.
For most investors in the real world making a million dollars on a single stock requires huge growth for the buy and hold investor or huge and repeated volatile price swings for the short term swing trader/investor. A single stock that comes to mind is Microsoft. If you had purchased 100 shares of Microsoft at $21 a share when the company went public you would have 28,000 shares today worth just under $1,500,000 today. And you would be collecting more than $40,000 in dividends every quarter. You can make a huge amount of money by picking the next Microsoft.
Smart Investing Over Time in Many Stocks
Although the founder of Microsoft, Bill Gates, is the richest man in the world the third richest is Warren Buffett. Buffet turned a textile business into a stock holding company in the 1960’s and turned it into an investing powerhouse. If you had purchased B shares in 1996 you would have seen a seven fold increase in your investment but if you had purchased A shares for $1,000 in 1964 your investment would be worth about $10 million today. Buffet practices buy and hold investing using intrinsic stock value as a guide. He has had many more winners than losers and is considered the most successful investor in the world.
Is There a Short Route to Profits?
Peter Lynch, the legendary manager of Magellan Fund, tells a story about a delivery man who noticed that one of the companies he delivered to was adding on to their plant. He asked why and was told that they had received a new set of orders and were hugely expanding their business. The delivery man bought the company’s stock for a few dollars a share and was pleased when it went up a thousand fold once Wall Street caught on.
The Common Thread
Buffet has said that he never invests in a company unless he understands what they do to make money and how that approach will continue to make money into the future. And he never buys at inflated prices. This is basic value investing. Whether it is picking the next Microsoft, riding along with a Warren Buffett or spotting a clear opportunity and taking advantage you can make money investing in the stock market. How much depends on your paying attention, spotting opportunities and taking advantage in a timely fashion.