Managing your stocks: 5 dos and don'ts!
While some politicians and others emphasize the performance of the stock market over the broader picture/scope of the overall economy, few seem to be properly prepared and/or ready to deal with the major necessities of investing in stocks. It requires an open mind, and the ability to focus more on reality than emotion, and to consider a variety of potentially relevant factors! As a registered representative and principal of an investment firm for quite some time, I strongly believe that potential investors (especially in the stock market) should have a mindset that takes these variables into account and does so in a more informed and focused manner. With that in mind, this article will attempt to briefly consider, examine, review and discuss 5 important considerations that
Evaluate fundamentals/financials: Unfortunately, in many things today, many people over-rely on the analysis/opinions of others rather than thoroughly examining the fundamentals of a particular company, as well as audits, financial statements, meanings, representations. Read books, take courses and understand key terms. Understand, how to read and understand budgets and financial statements. Why do analysts make certain forecasts or analyses? Try to start with emotions, logic, and!
What to do when the stock price rises? : Stock prices may go up, up, hold steady or go up, down. What to do when the price of a stock rises after you buy it? Ask yourself, if you didn't already own it, would you buy it at a higher price? If the answer is yes, then, buy additional shares! If not, sell what you do own? If you're not sure, then it makes sense to hold or sell some of it to make sure you don't lose money if/when the price drops! Be objective!
stock prices remain stable! What strategy is logical and a smart approach if/when the price is roughly the same as when you originally invested? Don't fall into the trap of becoming emotionally attached to a particular stock, but rather, after a period of time, reconsider if you reinvest the money you would have worked so hard to earn on this company! If so, hold and consider buying more shares, but if not, sell your position!
Falling stock price: What do you do if the stock price falls? Some people panic and either sell immediately or consider doing so! While this may be wise, in some cases the wisest approach is to ask yourself again if you still believe in the particular company, and if you do, maybe you should invest in more shares!
Short term, medium term or long term: Consider, are you primarily focused on short term/immediate results, more intermediate results, and/or long term? Know and remember, why are you buying? Your intentions, growth or revenue, or a combination of both? Are your goals/objectives/expectations in some way - realistic?
Be fully aware, before you invest, of what the key considerations might be, and your personal comfort zone! Always consider these, as well as the potential risk/reward basis!