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Picking a path through the marketsBy Bina Brown  Global stock markets can get rocky at times, but they offer the prospect of higher returns. SUCCESSFUL INVESTINGThe following 10 tips can help in the search for good investments 1. 2. Look for quality and competent management 3. Recognize that risk equals return 4. Look for shares that are undervalued 5. Do some research 6. Diversify 7. Don't try to time the market 8. Try dollar cost averaging 9. Invest for the long term 10. Make sure the shares are liquid if you have to sell RELATEDYOUR E-MAIL ALERTS(CNN) -- The world's stock markets offer the prospect of attractive returns, but they can be a minefield for many investors. The ultimate aim is to pick more winners than losers. Yet, finding a financially healthy, well-run and undervalued company that represents a sound opportunity for solid share price appreciation isn't always as straightforward as it sounds. Just as there are plenty of examples of companies that outperform the benchmark index and offer excellent investment opportunities, there has been many a household name company that has underperformed the overall stock market. The key to earning consistent returns and increasing the value of a share portfolio over the medium to long term is to be able to identify the great businesses that are financially healthy, have great leaders and management teams, and are undervalued. Not surprisingly, this requires a bit of research. Investors could do worse than look at the approach taken by one of the world's richest professional investors, Warren Buffett. He once told a group of shareholders in his company Berkshire Hathaway that he got excited about buying shares in a business when the following applied: it could be understood; had favorable long term prospects; was operated by honest, competent people and was attractively priced. Buffett also sticks to some other "golden rules" of investing: he doesn't put all his eggs in one basket and he invests for the long term. Diversification: While the temptation might be there to invest heavily in one company at the expense of any others or put everything in the share market while ignoring other asset classes, it is not a sound strategy. Diversification reduces risk. Diversification can be quite broad, where you invest some money in shares, some in property and some in cash. In the event that one of these asset classes declines you have not lost everything. A diversified share portfolio might be one that includes investments in various sectors including banking and finance, media, health and resources. Further diversification could be achieved by holding the shares of a bank from your home country and those of another country. A diversified portfolio will generally have a lower level of volatility and higher long-term return when compared with less diversified portfolios. If each of the investments in a fund's portfolio is exposed to different types of risks and different markets, there is less chance that all the investments will go bad at the same time. To be properly diversified a portfolio should have exposure to equities, both in the home country and overseas, fixed interest securities, property and cash. Time in the market, not timing: While Buffett has a knack for buying shares in a company when they are cheap and out of favor, not everyone is as adept at picking the bottom of the market. If you follow the basic rules of investing it shouldn't matter when you enter the market. History tells us that regardless of when you enter, if you choose quality stocks they will generally perform well over the medium to long-term. This is the thinking behind the saying "It is the time in the market -- not timing the market." It has been proven time and time again that all shares have their troughs and peaks but with great companies the peaks are generally significantly stronger than the troughs. Therefore, if there is a downturn or correction in the market it is imperative that investors don't panic and realize their losses by selling. Dollar cost averaging: This sits well with timing and is an investment strategy in which a set dollar vallue of shares is bought at regular intervals, irrespective of the actual market price. It is human nature to sell when times are bad (so shares may be cheap for a potential buyer) and buy when times are good (so they usually are more expensive). Dollar cost averaging usually reduces the average price paid for shares. Essentially, in most cases if you decide to invest $1000 twice a year in one company, assuming the shares rise and fall in that time, you will end up buying the most shares when they are at their lowest price and the least shares when they are at their highest. Next: Past performance is no guarantee for future success 
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