Types Of Stock Market Investors

Whilst there are millions of different people who invest their money in the stock market, they can all be grouped into having one of two main investing personalities.

These personalities not only determine how they invest in the stock market, but also how much they invest and how much they are likely to make.

In this article we will look at the two main stock market investing personalities and the characteristics of each.

The Conservative Stock Market Investor

A conservative stock market investor is someone who puts their money into a tried, true and tested investment vehicle.

Conservative investors invest their money in a safe and secure place, and typically do so for long periods of time.

When investing in the stock market, a conservative investor will typically look for companies that display the following characteristics:

Proven Performance

A company which shows an upward trend in terms of growth, even if this trend is slow.

Market Size

Companies should be large-cap, which means they have a market value exceeding $10 billion. To the conservative investor, the bigger a company is the safer it is.

Market Leadership

Ideally a company should be the leader, or one of the leaders in their industry.

Staying Power

When making a long term investment you want to invest in a company that you think will be around for the long term.

The Aggressive Stock Market Investor

Although the aggressive stock market investor can make long term investments, they typically tend to look for short term investments that will give them a high rate of return in a short period of time.

The aggressive stock market investor will typically look for companies that display the following characteristics:

Potential

If a company offers a superior good or product than the competition, they have the potential for rapid growth. With rapid growth comes a rapid increase in stock value.

Capital Gains Possibility

The aggressive investor tends not to like dividends, and instead prefers money to be reinvested in the company with the aim of spurring further growth.

Innovation

Companies which have technologies, ideas or innovative methods which set them apart from other companies are generally good investment options.

Small Cap Stocks

Aggressive investors usually look out for small capitalisation stocks, also known as small caps.

Small cap stocks have the potential for growth because they are a newer and small company.

Large caps which represent larger more established companies tend to exhibit less potential for growth, but are usually a safer investment option than small caps.