Although some politicians etc. focus on the performance of the stock market rather than the broader picture/scope of the overall economy, it seems that very few are properly prepared and/or ready to handle the main necessities, to invest in stocks. It takes an open mind and the ability to focus more on reality than emotion and consider a variety of potentially relevant factors! Having been a registered and principal representative of investment firms for a considerable period of time, I strongly believe that potential investors (especially in the stock market) should have a mindset that takes these variables into account and proceeds, d a wiser and more focused way. With this in mind, this article will attempt, briefly, to review, review, revise, and discuss 5 important considerations regarding the management of stock investing.
1. Assess fundamentals/financials: Unfortunately, as with many things, many people these days rely too much on other people’s analysis/opinions, instead of looking in depth at the fundamentals of a particular company and what the fundamentals mean and represent. audited financial statements. Read books, take courses and understand key terminology. Ability to read and understand budgets and financial statements. Why do analysts make certain predictions or analyses? Try to separate emotion from logic right from the start!
2. What to do when the price of a stock goes up? : A stock can go up, stay – flat or go down, in price. What should one do when the price of a particular stock goes up after buying it? Ask yourself, if you didn’t already own it, would you buy it, at the highest price? If the answer is yes, then buy additional shares! If not, sell what you own? If you’re not sure, then it makes sense to hold or sell some of them to ensure you don’t lose money if/when prices drop! Be objective!
3. The share price remains stable! : Which strategy makes sense and is a smart approach if/when the price stays roughly the same as when you originally invested? Don’t fall into the trap of becoming emotionally attached to the stock in question, but rather, after a while, consider whether, again, if, you were investing, a new, would you put your hard earned money on this company! If so, hold and consider buying more shares, but if not, sell – your position!
4. Stocks go down: What should you do if the price drops? Some, panic, and immediately either sell or plan to do so! While this may be wise, in some cases the wisest approach is, again, to ask yourself if you still believe in the particular company and, if you do, perhaps you should invest in more shares!
5. In the short, medium or long term: Ask yourself if you are primarily looking for short term/immediate results, more intermediate and/or longer term results? Know and remember why you bought? Was it your intention, your growth or your income, or a combination? Are your objectives/goals/expectations somewhat realistic?
Before investing, understand what the main considerations and your personal comfort zone may be! Always consider these, along with the potential, risk/reward basis!