Stock Market – Investors reveal how they make money on the stock market

Sharon Connolly hedged her bets with a $25 investment at the age of 44 after having no experience on the stock market, and she is now sitting on a $130,000 portfolio.

“I use a high-level, common sense approach,” she said. “Invest in what you know and research what you don’t. I read the news, follow companies on LinkedIn and have learned to read a simple balance sheet.

“Sometimes I dig a little deeper. For example, everyone is using Uber, but the company carries huge debts without a solid strategy forward. They’re always one step away from being shut down by a regulator. That’s not a long-term investment for me, but you could have made some quick-wins with Uber if you got in early,” Ms Connolly explained.

“I also believe it’s handy to follow trends in order to see where some interesting opportunities lie. For example, when the pandemic hit many organisations and enterprises adopted platforms like Zoom and Microsoft Teams to communicate with their teams and clients, so it was likely that these types of stocks would go up.”

Davide Marcotti, a 30-year-old from Sydney, started investing in 2017, and has now grown his portfolio to over $65,000.

“The most successful investors and mentors I have ever had the privilege to speak to have always taught me that no one will ever be able to time the market. Investing is a marathon, not a sprint,” he said.

“Dollar cost averaging, or DCA, is, in my opinion, the best way to minimise volatility risks and grow capital over time. This strategy prevents you from catching a falling knife or investing at all times high,” he explained.

“I also spend a considerable amount of time every day reading the news and studying the markets in order to discover potential investment opportunities.”

Once he finds a potential stock that’s worth investing in, he does a “stress test” of his idea.

He asks himself questions like: Why do I actually think this asset is going to outperform the S&P 500? How does it fit in my existing portfolio?

He also has a play with a virtual account on platforms like eToro to tinker around with a mock portfolio without having to risk any real money.

Mr Marcotti also checks in with other investors and friends to see what they think of the stock and where they see it going in the next year or so.

Finally, he takes time to study the competition.

“Every company has competitors. Think of Amazon versus eBay or Apple versus Samsung. Ask yourself why this particular company that you have in mind is going to perform better than its competitors, as well as its expected growth projections in the next five to 10 years,” Mr Marcotti said.

Dylan Weston, a 27-year-old from Melbourne, managed to leave his day job to focus on markets full-time

“I have spent a great deal of time mastering my technical analysis skills and ability to read charts,” he explained.

“What I like about technical analysis is that within a few seconds of looking at a stock’s chart you can instantly understand the short, medium and long-term trends at hand. This can help you save time by narrowing down the companies that are in a healthy uptrend.”

Mr Weston analyses companies based on criteria before he makes a move.

“I often go back to my charts to determine a safe time to start investing in stocks, as well as identify where my options are to sell,” he said.

“I believe smart investors should always know what is at risk and understand how much they can afford to lose, before making any investment decisions.”