i wrote a long reply last night but as i posted it the site was suspended for maintainence
in my very limited experience, the only method i personally know to get rich from shares is speculative investinng for multiple gains, what is called finding the "multi-bagger"
as Sharejon said: "Fundamental analysis is the real core of the company"
although i am not rich yet (basically due to being gutless) i have learned how to pick investments with multiple gains and have made enough to leave my day job to focus full time on the ASX
my method is to read the daily ASX announcements, here: http://www.asx.com.au/asx/statistics/prevBusDayAnns.do
examples of companies that have earned me multiple gains recently include AKM, ELM, PEK and VOR
if you read back over time (here: http://www.asx.com.au/asx/statistics/announcements.do) into the announcements of these companies, you will find when they announced to the market their acquisition of a well defined project or when they (in the case of PEK) first announced their drill results
for example, when ELM announced its acquisition of its potash project, the share price was 35 cents & the option price 15 cents. today the share price is $1.80 and the option price $1.55. the gain on the option price over l8 months is 900%
to analyse such opportunities requires some knowledge & skill. most of us here have no formal background and are self-taught
IF YOU WANT TO DO SHARES, IMO, THE MOST IMPORTANT ATTRIBUTE YOU MUST HAVE IS INTITIATIVE
if you simply follow the recommendations of others, it is likely you will get burned because you will probably buy in once the horse has bolted or you will not know when to sell when a sudden negative announcement is made or will not know when the share becomes overvalued
so skilling onseself in FUNDAMENTAL ANALYSIS is the key
for mining stocks, you must learn enough about various minerals, grades, mining methods, opex, capex, earnings, EPS (earnings per share), etc
for bio-tech (medical), you must learn judgment. is this new medical idea really necessary & can be it achieved? riches have been mostly lost (and some made) in bio-tech
for companies that earn cash flow or profits, you must learn the basic fundamental analysis, such as balance sheet appraisal, debt:equity, EPS, PE ratios and forward outlook issued by the company
alot of this is common sense. if you do not have a natural knack for such analysis, you may struggle
for example, to look at a balance sheet of a company is not very difficult. it does not really require any training
to end, a recent current entry level investment i have made is in ECM. ECM just announced two significant things:
1. they acquired a lithium project 2. they must raise some capital at 3 cents for the project acquisition
the positive is the acquisition of the project, which is quite mature
the negative is the capital raising at 3 cents. many of these buyers of shares at 3 cents many want to sell immediately, given the share price is currently 7 cents
so i bought a small position at 7 cents and hope to purchase a much larger position at around 4.5 cents when the new 3 cent shares are issued
another company that has announced a "potential" project is FMJ. they have not announced the actual project yet so I have only bought a few shares in anticipation i may make a loss. with FMJ, i missed the intial announcement so was forced to buy at 75 cents (instead of at 31 cents). But when when the actual project is announced, based on the quality of the announcement, i will consider buying more shares (or selling at a loss what i have). at this time, FMJ has far greater risk than ECM. currently, there is a risk of losing with FMJ if the project is poor or not actually acquired
OK...thats it
if you examine the share charts & announcements of companies such as MSB, EXT, SFR, IVA, PRU, ELM, AKM, PEK and VOR, you will see how it is possible to get rich from shares by making fairly prudent & low risk economic decisions
but as i said, INITIATIVE & BASIC KNOWLEDGE IS ESSENTIAL
