Investing successfully in stock market? Index fund investing strategy analysis

• Author: Flamur Bunjaku
• Position: 'Goce Delcev' University ? Stip, North Macedonia
• Pages: 97-109

European Journal of Economics, Law and Social Sciences

IIPCCL Publishing, Graz-Austria

Vol. 4 No. 1

January, 2020

ISSN 2519-1284

Acces online at www.iipccl.org

97

Investing successfully in stock market? Index fund investing strategy analysis

PhD (C.) Flamur Bunjaku

“Goce Delcev” University – Stip, North Macedonia

Abstract

This paper aimed to examine the best investing strategies in stock market. We claim that Index

Fund Investing is the best investing strategy in stock market. Most of the empirical evidence

used in this paper leads us to the conclusion that it is almost impossible for an investor to

outperform the overall market by investing in a single company or by market timing selection.

We believe that this paper has two-folded contribution. It contributes to the academic literature,

as well as towards providing basic knowledge of investing in stock market, which we believe

would minimize risk of loss. Investing in stock market is a challenging action. Many investors

lose money in stock market. The reason for that is lack of understanding of market cycles,

emotional decision making, following a speculative gambling investing strategy, and alike. In

this paper we have provided what we claim is the best strategy of investing in stock market.

Using empirical facts and analysis we have a empted to provide the best strategy of investing

in stock market, by which an investor can mitigate risk and guarantee success. We claim

that investing in mutual funds index such is S&P 500 and other similar indexes is the best

way for long term success in stock market. S&P 500 is a stock market index that measures

the performance of the 500 companies listed in US Stock Market. The involvement of these

companies depends on their success. If they do not perform well, they are removed from the

index. The la er strategy makes S&P index more secure compare to individual companies.

Keywords: Investment, stock market, fund, analysis.

Introduction

Stock market is a type market which goal is to provide services of issuing, buying and

selling stocks on a stock exchange or over the counter. Stocks, also known as equities,

represent a fraction of company ownership. In stock market investors usually buy

shares. The di erence between stock and shares lies in the fact that a stock refers to

the capital raised by the issuing company, whereas shares refer to a single unit of

stock. For example if you own 1000 USD stock of a company and the price of a share

is 50 USD, it means that you own 20 shares in that company. The main goal of stock

market is to raise money. In order to raise money companies which are owned by

few individuals o er ownership of the company by issuing shares through an Initial

Public O ering known as IPO. So, potential investors would by the shares of that

company. The company itself would raise money, which is usually used for further

investing activities, and on the other side the buyers of the shares would take the

benef‌i ts of the company in proportion of the shares they possess. The main stock

markets in the world are the New York Stock Exchange (NYSE), the London Stock

Exchange (LSE) and the Tokyo Stock Exchange (TSE), and alike.

There are many cases of investors who have lost most of their savings within a short

time period. However, there are also many of those who have gained by investing in

stock market. Therefore, it is very important to use an adequate investing strategy