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7 Stock Market Tips to Live By
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Planning to go into stock market investment? Here are some general tips
to live by. 1. Understand the basics of economics. The stock market
follows the laws of economics, particularly the law of supply and demand.
If there is a greater demand for the stocks of a particular company, the
price of its stocks will go up accordingly. On the other hand, if there
are more stocks available for selling (more sellers) than stock buyers,
the unit price of that company ’s stocks will go down. 2. Study your
prospective company/ies. Read up on the company ’s profile: products,
services, operations, and track record in the business. This is important
to assess the company ’s stability and capability to deliver its promises
and meet its profit targets. 3. Choose companies that are more likely to
stay. With so many existing companies in the stock market, choosing
becomes a big challenge for beginners. Government-owned companies and
businesses are relatively stable, unless there is a political revolution
in the horizon. Telecommunications and gasoline companies are also stable
and profitable since the demand for these products and services is
constant. Although IT companies are the fastest growing in the market
today, be careful because there are so many of them that it checking on
their profiles could be very taxing. Choose IT companies that have proven
track records of profitability and stability of at least 10 years. 4.
Always read and watch the news. Dealing with the stock market is not a
guessing game. Sound decisions and good intuition are results of
constantly learning about the local and global political and economic
happenings. Give particular attention to the industry where your company
belongs. Even stable companies can suddenly go bankrupt or experience a
big blow that can bring them down. Remember Enron? 5. Spread your
investments. Avoid investing in just one company. If all your stocks are
concentrated to one company, the chance for loses is also greater. Spread
them out so that earning investments can cushion those investments that
earn less. 6. Do not rely solely on stock brokers. Do your homework.
Remember, the stock broker is “gambling ” with your money. When an
investor does not understand how the stock market works, he/she becomes
vulnerable to scrupulous brokers. 7. Do not be greedy. Although stock
market investment is all about profits, becoming greedy will make an
investor lose his/her better senses. He/She might suddenly forget to
check on economic rumors and decide right away to buy or sell thinking
that he/she would make big profits by doing so. |