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# More Stock Investment Strategies

There are a tremendous number of stock-buying strategies. Many of them are based on the basic fundamental- and technical analysis methods expounded upon in the article Basic Investment Strategies. While it would be impossible to cover them all, here are some of the most popular approaches used by experienced investors. Many of these strategies can be combined with others to formulate a more personalized technique that will meet your individual needs, based on your own investment philosophy. But no matter what strategy you choose to make use of, the ultimate key to success lies in staying true to those investment ground rules that you designate for yourself.

Value investing is one example of how an investment approach uses fundamental analysis. It involves purchasing stocks that are considered undervalued by one or more fundamental measures. Although this may sound simple, determining the criteria for an undervalued stock is something that is not widely agreed upon among investors.

Formerly, a stock was considered undervalued when it was being traded at less than the sum of its total assets; or in other words, below its book value. However, few investors continue to use this definition. Instead, more modern valuation theories state that intangibles such as intellectual capital (or, an intelligent and viable work force) are of great importance to a company's overall worth. Advocates of this type of thinking tend to use other valuation methods, such as the price-to-earnings (P/E) ratio, to determine whether a company is undervalued.

Growth investing has often been considered the direct opposite of value investing because growth investors focus on how quickly a company has been growing, rather than on how closely its share price reflects its current value. Measuring a company's growth usually involves determining how quickly it has been increasing its earnings or revenues. However, successful growth investors not only look for those companies that have the fastest growth rates, they look for companies that are experiencing this growth at a reasonable price.

The main risk with investing in growth companies is that their growth rate may decline in the future; therefore, it's wise to consider companies that have long histories of strong performance. In general, growth investing tends to be somewhat riskier than value investing, but the potential gains are likely to be greater as well.

The buy what you know approach is actually a way of finding potential investments rather than a pure investment strategy. It involves investing in companies that you or others that you know do business with. As an example, let's say that you decide to try out a new department store in your area. Upon arrival you find it very difficult to find a parking space because the lot is completely full. Inside the store, you notice that the prices are very reasonable and the checkout lines are packed with shoppers. So you decide to do a little informational digging into the company. If what you find out seems to be good, and the company is publicly traded, you might decide to purchase its stock.

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