How To Know Your Stock Investments

Having a fair share of the over two year’s downturn of the capital cum stock market, it becomes imperative for one to be vigilant in investing the right stocks. Most investors usually play to the gallery while investing in their choice shares or stock investments. We should lay more emphasis on the capital base, performance and book value of a particular quoted company from their End of Year results.

The term 'Investment' is simply an act of putting aside a certain percentage of your income to generate profits on your invested capital. We have various forms of investments available to us such as; Bonds, Equity Shares, Forex, Insurance, Real Estates, etc. However, emphasis would be on how to understand the dynamics of investing in the stock market.

Prior to the market slip, most investors had one thing at the back of their mind; how do I make good profit from this company I am investing in for now and in the future? Therefore, apart from giving mandates to your Stock brokers or Agents to buy stocks, many investors hardly care much about monitoring or determining the values or movements of the market price of these stocks other than anticipating the proposed Dividends and Bonus shares given at the end of the company year results.

In the area of debt management, investors must not go too deep in investing stocks on borrowed funds. Technically, this is called Margin debt or Margin trading. Margin debt is a tool used by stock market speculators to increase their stock trading profits. Investors borrow money from capitalized Finance Houses or Banks to buy more stocks than they could otherwise afford on their own. During the happy days of thriving economy, most investors plunged a lot of funds in the stock market for greater profits in the sector which gave rise to the market boom. Investing in stocks was the order of the day as everyone was investing without understanding the basic indices of the company shares they are buying into. Its’ risk margin is higher than that of its’ profit margin. Therefore, as some countries of the world have recovered from the market crash, investors should tread softly when engaging in borrowed funds (Margin Debt) in their investments.

Another habit Investors must adhere to while investing in stocks is to shun greedy tendencies. Investors should be contented with the funds available to them while buying stocks. This would enable them to manage their resources and make great turnover within a period of time. The major factor that resulted into the market (Economy) meltdown, it is our greed to make money overnight. The third richest man in the world and great stock investor, Warren Buffet, in his teachings advised that wise investors must not follow the greedy ones in buying popular stocks but should invest in an unpopular but promising one as the former may crash in just one slip. Some stock’s prices move slowly and within a relatively narrow range, while others bounce up and down a lot.

In knowing your stocks better, investors should get updated through all means of information available and seek the advice of financial advisers as understanding these essential values of stock investment forays will place you in the front burner to succeed in the stock market.