Although, some politicians, etc, emphasize, how the stock market, is performing, rather than the broader – picture/ scope, of the overall economy, it seems, very few, are properly prepared, and/ or, ready, to handle the principal necessities, of investing in stocks. It takes an open – mind, and the ability to focus, more on reality, than emotions, and consider, a variety, of, potentially, relevant factors! Having, been a Registered Representative, and Principal, of investment companies, for a considerable period of time, I feel, strongly, potential investors (especially, in the stock market), should, have a mindset, which considers, these variables, and proceeds, in a wiser, more – focused way. With, that in mind, this article will attempt to, briefly, consider, examine, review, and discuss, 5 significant considerations, regarding managing stock investing/ investment.
1. Evaluate fundamentals/ financials: Unfortunately, as in many things, these days, many people, overly, rely on the analysis/ opinions of others, instead of thoroughly, examining, a particular corporation’s fundamentals, and what the audited, financial statements, mean, and represent. Read books, take courses, and understand, key terminology. Know, how to read, and understand, budgets, and financial statements. Why are analysts, making certain predictions, or analyses? Try to separate, emotion, from logic, from the onset!
2. What to do, when a stock’s price, goes up?: A stock may go, up, stay – steady, or go, down, in price. What should one do, when the price of a particular stock, goes up, after you purchase, it? Ask, yourself, if you didn’t already, own it, would you, buy, at the higher price? If the answer is, yes, then, buy additional shares! If not, sell what you own? If you aren’t sure, then, it makes sense, to hold, or sell – off, some of these, to ensure, you don’t lose money, if/ when, prices drop! Be objective!
3. Stock’s price remains steady!: What strategy, is logical, and a smart – approach, if/ when, the price, remains, about the same, as when, you, originally, invested? Don’t fall, into the trap, of becoming, emotionally – attached to the particular stock, but, rather, after a period, of time, consider, whether, again, if, you were investing, anew, would you be putting your hard – earned money, on this corporation! If, yes, hold, and consider, buying more shares, but, if not, sell – off, your position!
4. Stock goes down: What should you do, if it goes down, in price? Some, panic, and immediately, either, sell – off, or consider, doing so! While, that might be wise, in some instances, the wisest approach, is, to, again, ask, yourself, whether, you still believe in the particular, company, and, if, you do, perhaps, you should, invest in more shares!
5. Short, intermediate, or longer – term: Consider, whether, you are, looking, mostly, at the short – term/ immediate results, a more, intermediate one, and/ or, the longer – run? Know, and remember, why you purchased? Was your intention, growth, or income, or a combination? Are your objectives/ goals/ expectations, somewhat – realistic?
Before investing, fully understand, what the principal considerations, may be, and your personal comfort zone! Always, consider these, as well as the potential, risk/ reward basis!
By Richard Brody