A beginner stock trader often wonders why share prices keep on changing in rapid succession. How to get at the correct valuation of a particular share? Why this arithmetic is so difficult? For a carefree investor, these issues do not matter much. He works by taking risks. The analysts and researchers have devised many models for the guidance of the investors. The techniques are applicable to stocks as per the circumstances of the case.



Experimental techniques for stocks from the point of a new investor should help to build a healthy portfolio. One, who has never been in the share trade, needs to get introduced to terminologies like Bear and a Bull Market, mood of the market, day trading, buying and selling the shares through the internet, etc. As you study the literature you come across extraordinary success stories related to the Exchange and also the great market crashes. In between all these uncertainties, one wishes to find the comfort level and establish one's identity as an investor.

One such option for the new entrant is the Compound Stock Exchange (CSE) technique. With not much brisk action in this from the beginner's point of view, it has many positive aspects. The rules are specific about the shares to be purchased, when to be purchased, and the timings to sell a particular option. This method offers protection against poor decisions that are likely to result in losses. Your earnings are assured to be not less than 3'6% per month. However intelligent may be the approach for investment, the chances of wrong judgment as for one or two shares of the portfolio are real. CSE saves you from the total loss position and gives you some hope and encouragement with assured returns, till such time your shares recoup their original health.

The ?Value Investing? method followed by Warren Buffet is another experiment that has paid rich returns on investment. Warren has built immense fortunes employing such methods and the level of success achieved by him has no parallel in the share market history. This is supposed to be a simple method as for explanation, but actually not so simple to implement. But when it is properly done, it is worth the efforts. As per this procedure, you buy a share/commodity for less than its real worth. But this methodology requires detailed study of the company. One interesting explanation by Warren is not to invest in shares that solely rely on a particular commodity such as gas and oil. The reason is, the prices of the commodities swing up and down and hence growth can not be assured. Any company that relies on commodities identical to another company in the line has to face tough competition, and it will have the adverse effect on the price of the share. The chances of downward slide are more.

Nobody has ever been able to go to the root cause of the upward and downward swings in shares and yet research and analysis as for its causes goes on unabated. The new findings encourage for a while only to be overwhelmed by certain other developments in the changing market conditions. But experience gives confidence to the investor to move ahead in the stock market.