Goal of Investment: to make a return on capital commensurate with your risk appetite. Underlying Principle: the higher the risk of the underlying asset, the higher the rate of return. Thus, US treasuries (zero-risk) serve as the baseline of investment returns. Risk can be systemic (i.e. market crash), sector/industry-based (i.e. commodities) or individual (i.e. a single tech company rockets off, or goes out of business). Risk Profiles: depending on your risk appetite, you should have different investment strategies. Your risk appetite should be informed by your financial goals. High Risk Appetite: people with high risk appetites are not relying on their investments anytime soon. People in this profile may invest in individual securities, ETF's, emerging market funds, currency markets, real estate speculation, or other highly volatile assets. Medium Risk Appetite: people with imminent financial goals (i.e. they want to buy a house in 5 years, or have kids to send to college in 10 years). People in this profile may invest in the overall Index, low-volatility mutual funds, and the such. Low Risk Appetite: people who depend on their investments and need stability. People in this profile may buy corporate bonds, treasury bonds, or simply put their money in a savings account (which was fine in the 80's, when interest rates in the US were at 8%, but pretty useless in today's environment) Obviously, you can have multiple risk appetites for different compartments of your life. Most people will put day-to-day money in a savings or checking account, save for a certain imminent purchase using lower-risk investments, and perhaps be more aggressive with any excess capital left over and chase higher returns. Given the demographic of DLP, most of us will have a fair high risk appetite. While there are many other investment vehicles (i.e. real estate speculation, currency markets, etc.) I'm only going to talk about stock market strategies here. Basic Stock Market Investment Strategies 1. Buy-and-hold the Index: in this strategy, you invest in the Market Index because (over time) it tends to go up. Burton Malkiel is a huge proponent of this strategy. The basic philosophy is that, yes, there will be booms and bubbles over time. But these booms are bubbles occur randomly, and can't be predicted. Instead of trying to divine which way the market will go today, Malkiel argues that you're better off just buying index funds and putting it out of mind. He points out that most professionally managed funds don't beat the market anyways (and those that do can easily be statistical flukes). As an individual investor, if your goal is to maximize wealth in the long run, then just put your money in the market and let it grow over the decades. Reference: A Random Walk Down Wall Street by Burton Malkiel 2. Fundamental Analysis: in this strategy, you invest in securities and sectors that are undervalued. Buy low, sell high. The basic philosophy is that the market is not always efficient, and that sometimes, solid companies don't get the valuation they deserve (or vice versa, some stocks may be over-bought). However, over time, the market inefficiency will correct itself. Therefore, you should focus your effort on extensive research to identify companies that are undervalued, but have great fundamentals. You then buy their stock at a cheap price and wait for it to appreciate as the market catches up with your insight. Warren Buffet is the most famous and successful executor of this strategy. He buys solid companies with good brands (i.e. Coca Cola) that are undervalued and holds them long term. Reference: The Intelligent Investor by Warren Buffet 3. Animals Spirits: in this strategy, you ride the wave of investor sentiment, buying stocks that are in an uptrend and shorting stocks that are in a downtrend. The basic philosophy is that investors are irrational, and that since the Market is simply an aggregate of lots of irrational activity, fundamental analysis is unreliable. More often, volatility is the response of investors overreacting to news or jumping on a bandwagon. After all, the price of a stock is simple supply vs. demand. If a stock gets a lot of positive press, and more investors know about it, it will enjoy a happy upswing and steady growth. On the flip side, negative press can destroy a stock (classic example: Apple stock (AAPL) showed phenomenal irrational growth, but then plummeted when it lost favor after the death of Steve Jobs). As an investor, you should buy stocks as they come into favor and short them when they fall out of grace, thus making money on anticipating volatility. The key to success is to avoid being the biggest fool at the end of the Ponzi scheme, with the hot potato in your hand. 4. Technical Analysis: in this strategy, you analyze charts because the patterns made by the ticker marks will tell you which direction a stock is going. The basic philosophy is that the market is ultimately efficient. There is no use wasting your time researching company fundamentals, or closely reading the news to predict market trends. Everything that is relevant is already priced into the stock, and can be gleaned by studying the ups and downs. Stocks that tumble follow a ‘falling knife’ pattern. Stocks that are about to take off will have a ‘double bottom’ pattern. As an individual investor, you will never have the inside information or resources to successful pull off fundamental analysis or animal spirits investing. But the big boys (hedge funds, PE shops, Warren Buffets of the world) do and are already taking action. You just need to be able to read the signs and piece it together – all relevant information is in the charts. Reference: Technical Analysis: The Complete Resource for financial Market Technicians by Kirkpatrick and Dahlquist Hopefully, that's enough to get you all started. To the more experienced investors on this board: feel free to share your personal tips and philosophies. Disclaimer: I am 22 and have very little investment experience. Take everything in this post with a heap of salt.