Defining goals

Before deciding on an investment decision, we need to know our investment goals.
Below are three categories to help us deciding what kind of assets we are going to acquire for our investment especially in stock market. Each implies a different level of risk.

- Capital appreciation. Our primary goal is to grow the value of the portfolio. The best capital appreciation prospects are usually the most volatile, and hence, the riskiest stocks.

- Balance of capital appreciation and capital preservation. We want to grow the capital but without undue risk.

- Capital preservation: You want to achieve reasonable returns but priority No. 1 is preserving your existing capital. This is the lowest risk category.

Pick portfolio objectives with risk tolerance in mind. If we're likely to lose sleep when one of our stocks drops 10%, avoid the pure capital appreciation portfolios. Conversely, these portfolios might be our bag and craving excitement and want something to talk about with friends and co-workers. Some investors put their "serious" money into low-risk portfolios, but allocate a small amount of "fun" money for speculative portfolios.


Do you have the time?
Some portfolios require monitoring on a daily basis, while others require only occasional checks. Here are a specification of time commitment for each portfolio:

• High. Check on stocks daily, or at least, weekly.
• Medium. Check on stocks weekly or, at a minimum, monthly.
• Low. Check on portfolio only occasionally.

Spread your bets
Spreading the risk by acquiring stocks through diversification.

With only a few stocks, one bad performing stock will banish our returns. At a minimum, each portfolio should contain at least 10 stocks, and 15 would be better.

Whether that's practical depends on how much we're planning to invest.

Momentum Stock
Capital Appreciation (Time Commitment: High)

Momentum-stock selection strategies are the favorites of hedge-fund managers and other pros because they're effective at spotting growth stocks likely to move up fast. Two common characteristics in momentum strategy: They require stocks with a combination of strong price charts and strong recent earnings growth.
This particular stock are profitable small companies that have outperformed most stocks over the past year and are trading near their 52-week highs. They must have recorded at least 18% year-on-year earnings growth in their last quarter and have some institutional ownership.
Because these are "hot" stocks, you must watch them closely, preferably, daily. Sell any stock that falls 10% or more from its recent high.

Growth stocks
Capital Appreciation (Time Commitment: Medium)

This stock looks for reasonably priced stocks that have recorded moderate sales and earnings growth over the past five years. It is not as volatile and doesn't need to be watched as closely as the Momentum stocks. Buy it and plan to hold for one year. Until then, sell only stocks that have been acquired by another company or become involved in major ongoing scandals.

Dogs
Balanced (Time Commitment: low)

The Dogs is a contrarian, are likely to overcome problems that are currently pressuring their share prices.
The analysis are based on market capitalization (recent share price multiplied by number of shares outstanding). The dogs strategy screened for stocks that have market big caps, but the price drops over the past 12 months. The strategy involves picking the 10 worst performers from that list. Buy it and hold for one year. Then repeat the process. Do not sell any stocks during the year unless they are acquired by another company.

Boring dividends
Capital Preservation (Time Commitment: low)

Reduced expectations generally drive share prices down. This strategy pinpoints stocks with already-low expectations. They're only expected to grow earnings around 10% to 15% annually, which is too low to interest most growth investors. They pay dividends equating to 2.25% to 5% yields, which is too low to attract dividend yield chasers. The fact that they've grown dividends at least 5%, on average, annually over the past five years doesn't impress many. Buy it and hold for one year.

Please remember these techniques are not putting into account of the economic turbulence, political situation and so on and may not applicable in all the situation.....