Tips for investing in the stock market

Do you want to invest in the stock market but are new to the world of financial markets? Here is a list of tips for investing in the right conditions. These tips are intended for long-term investors with the objective of managing a stock market portfolio .

Investing in the Stock Market Tip 1 : The fundamentals are always right 

If you are investing for the long term in the stock market, fundamentals are very important. You must select a geographic area with solid economic growth, choose promising business sectors and finally select securities with good prospects for profitability.

This does not mean that you should only buy stocks whose indicators are all green. When all is well, it is often already too late to invest in the stock market. The objective is therefore to find stocks where you see strong growth potential but whose stock price does not reflect the real value of the company .

Individuals often tend to buy when the stock markets are up sharply and sell when a big correction occurs. However, it is the opposite that must be done. If you think the fundamentals of the company and the economy it is tied to are strong, see corrections in the stock market as an opportunity to take a position. This is where you will get the best deals if you want to invest for the long term.

Remember that you have the fundamentals, you will always be right but too soon….

Investing in the Stock Market Tip 2 : Being able to hold your positions

The fundamentals are always right in the long term, but in the short term that’s another story. Seizing a good buying opportunity following a correction in a stock market does not guarantee you the immediate success of your investment. To be right in the long term is often to accept being wrong in the shorter term. You will never buy at the lowest, unless it is luck. You must therefore be able to bear large losses for a certain period. This is often the price of a good shot in the long run, the ones you can make the most money on.

It is the mistake of many newbie traders to want their trades to be a winner right away. If you don’t accept the loss, you can’t win in the financial markets. When taking a position, the rule of thumb is always to consider loss. What if the scenario reverses this product? Are you able to bear the loss without jeopardizing all of your investments?

Investing in the Stock Market Tip 3 : Diversify your stock portfolio

All investors make the wrong investment choices in their trading careers, and you will be no exception. It could be that you have wrongly identified a bullish potential on a stock, or that the stock is simply being massacred on the stock market. You have to take it into account and consider it.

This is why the diversification of your stock market portfolio is necessary. It allows you not to put all your eggs in one basket. Diversifying is not just investing in several companies, it is selecting different business sectors and, if possible, different geographic areas. Diversification helps limit your risk on the stock market.

You just need to be right on a few stocks so that the losses incurred on your bad choices are quickly covered and generate profits. It is okay to make a mistake about an investment, the important thing is to be right about certain values ​​in your portfolio.

Investing in the Stock Market Tip 4 : Get rid of the trash

Among the companies in which you have invested, some of them may see their stock prices fall again and again…. What to do in this case ?

You need to get rid of it to prevent it from continuing to drag down your portfolio performance. Being able to take losses early on is one thing, but not wanting to accept that you got it wrong with your investment is another. Taking -10% on a security, that’s okay, with diversification the impact is limited. But getting to – 50% on your investment is not acceptable. You have to cut long before. If you no longer believe in the upside potential, that you are just hoping for a miracle, then cut your position.

Keeping a too losing position is risky to lose even more but it is also depriving yourself of this money to invest in another security which it could bring you back…. It is therefore a huge potential shortfall.

Investing in the Stock Market Tip 5 : Invest the money you can lose

Investing in the stock market involves risks (see sheet: How much to invest in the stock market ). You can lose a lot of your capital. So it’s not enough not to need your money to be able to invest it, you have to be able to lose it without impacting your life, without flinching.

To be able to lose your money is to relieve stress. Many newbie traders make the mistake of investing too much of their savings in the stock market. It is then difficult for them to bear the slightest loss and that is understandable! There is a difference between losing 10 or 20% of your savings and losing more than half….

To invest well in the stock market, you must diversify your portfolio but also diversify your savings. Never invest all your savings in the stock market!

Investing in the Stock Market Tip 6 : Realistic performance targets

Investing in the stock market is there to make your savings grow, not to make you rich. If you are going to the stock markets to make a fortune, a word of advice, do not invest in the stock market !!

Investing in the Stock Market Tip 7 : Let your winnings run

This is a common mistake among many newbie traders. They earn 10% on a title, they immediately think of protecting their earnings and cut their position. Conversely, when they will lose 50% on a title, they will not cut their position. Difficult to win in these conditions.

Before investing in a stock, you need to set a price target and stick to it. If you don’t see a major turnaround on the horizon, or new elements that challenge your scenario, let your gains run.

These are the big hits that will improve the performance of your portfolio with a view to long-term investment in the stock market. Do not forget it ! Your maximum gain should always be significantly greater than your maximum loss.

Investing in the Stock Market Tip 8 : Follow the news on your companies

If you have invested in stocks, you are a shareholder. I therefore invite you to follow the reports of the general meetings to see if the company is staying the course, continues to invest, to know its projects…. We still come back to the basics.

You should also follow the announcement of the company’s results or any important announcement that could significantly impact the share price.
On the other hand, do not let yourself be polluted by current events in general. Traders always tend to overreact to every announcement. What matters are the fundamentals over the long term.

Investing in the Stock Market Tip 9 : Make up your own mind

To invest well in the stock market, you should not take into account the different recommendations. The consensus may be right for a while, but in the end it’s always the fundamentals that get the upper hand.

In addition, the recommendations of the various banks or financial institutions lead to a conflict of interest. Indeed, the rated companies are the customers of these banks. A bad rating and the company may simply decide to change banks.

It’s a bit the same for rating agencies. These are the companies that ask the agencies to rate them…. and pay for it.

Ratings and recommendations are therefore not carried out in an objective manner. You have to put it aside and listen only to yourself.

You also don’t have to listen to newspapers. When they tell you to buy a security, it’s already too late, it means that the price has risen enormously. Often times, it’s when everyone says to buy that it goes down. There are many examples above.

On the other hand, specialized sites or magazines can give you investment ideas. It’s up to you to dig into the question by doing your own analysis.

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