Resumo de Investing In Stocks

INVESTING IN STOCKS:Why people invest in stocks?Human life is laced with an inherent attitude of taking adequate measures as a precaution for the future. The tendency to save for the future forms the basis for an investment. Of all the investments made by the people all over the world, investing in STOCKS of companies across the globe has become a much preferred option for the people as the stocks have performed better than most other investments. Investing in stocks gives a better return than other investing alternatives because it offers a greater flexibility as one can invest according to his capacity or money in hand. Further investment in stocks offers a good platform for small investors to multiply their earnings. Is it a complex process?There exists a general belief that to invest in stock one must be mentally prepared to take risks as it is volatile and ambiguous. Moreover many believe that it is a complicated process and requires analytical skills. While some people are comfortable sifting through the financial statements and spreadsheets of the company and analysing market potential before making an investment, some look only for an assured return on their investment. But what if you do not have the required educational background or skill to do the complicated financial analysis? It does not mean such people should shun away from investments in stocks. Some times even a well analysed stock investment may deprive of good returns. So then what is the yard stick for right investments in stocks? There is a simple thumb rule? First, identify the market leaders in the industry of your choice and invest in their stocks. Second, identify the upcoming companies that have registered tremendous growth in the recent years in the industries that are growing fast . In the first case consider it as a long term investment. Because even if the stocks of such great companies are priced lower than some of the recently grown companies of the same industry, you can bet on them for stability. You are assured of reasonable RoI. In the second category, you have to treat your investments as short term investment. You can make a quick buck by selling at a higher price in a short notice. Another way to ensure safe RoI is to keep a strategy for your investments. In simple you set a goal of fixed percentage and on your stocks reaching that magic figure try to sell them off. Market CapitalisationMany investors have the habit of investing in shares based on their market capitalization. Since market cap is nothing but the share price times the number-of-shares available for trading, it can not be vouched as an ideal strategy for making investments. For example when you buy few shares of a small company for a lower price your risk is minimised. In due course when the price doubles up you get a 100% RoI. But the amount of money invested may not be as significant as the percentage of the RoI, which is 100%. Under these circumstances in order to make your worth you might have to buy at least few hundred shares so that your RoI also is substantial. But when you do that you are risking your money. On the other hand just because a company is small and not widely known and its stock is priced low, you need not ignore it completely. Never forget that all the leading companies were small when they started and sold their stock. There are many gems among the small-cap companies. So it is always better to make a clear study of the company?s performances before making an investment.Another factor to keep in mind when making an investment is to avoid buying stocks that have crashed from greater heights. If you are very confident about the performance of the company which used to trade at a much higher price, it is better to wait until the company regains its glorious past.

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