Investing in Stocks Pt1
Created | Updated Jun 25, 2007
No one cares more than you do about your money. The professionals, be they your bank or insurance company may make you some money but if they fail, they are unlikely to suffer as much as you.If you want to protect your hard earned money then you will have to get involved and take matters in hand. That’s what many people are now doing using the tools provided on the Net. What you lack in expertise you can make up in motivation provided you devote enough time to do the research.
If you stick to Blue Chip companies your returns maybe lower but they will be safer and you will still participate in the ongoing growth of the economy. These companies are covered by just about every finance house as well as the press and all other news media so you are less likely to get any nasty surprises when it is too late to do anything about it.
The key to good performance is being reasonably proactive and following your investments at regular periods. Listing your holdings by date and price, you will be able to follow performance in absolute and comparative terms. Using a basic spread sheet you will be able to compare individual performance on a weekly or monthly basis and use a market relevant index as a reference. You will be in control and take the necessary action before it is too late. There's little point being told at the end of the year that your stocks underperformed the market. You will have wasted the opportunity to take corrective action in good time.
In your own work, you will be probably required to write a monthly report to your boss concerning performance on your objectives stating any deviations, as well as reasons and corrective action for the month to follow. This way you have a good chance of keeping things on track for the year end. Why not make a "report" to your self on your your investments as well?
With Blue Chips you do not have to rely on a single source of information. Others, much bigger than you are tracking performance and you can benefit from their work. Large companies are covered by financial advisors, banks, the press, the television and other sources on the Net.
Looking after a portfolio of shares can be fun too. You get to know about products, the sectors in which companies operate, and the political environment of countries and markets. You might invest on a sector where you have direct knowledge and maybe even in your own company. All of a sudden you can put to good use all kinds of information in the newspapers, TV, or the Net.
Putting all your investments on a sheet and focusing on them, is like running your own company. You have the investments, the products, the market, and the people running the products.
No other activity involves such a wide aspect of human endeavour as the investment field. Government changes, new tax and spending policies, interest rate changes, inflation, currencies, raw materials, energy, all have an impact on stocks. A flood, a hurricane, an earthquake, affect not only insurance companies but also the resources required to put things back as well as the impact on consummers.
There’s little that cannot be put to good use when you hold a portfolio of top companies. You may want to be in emerging markets but you know little about them. You can either go through a unit trust or find a company that trades in those markets and ride piggy back. Much safer to choose a local company and rely on their professionals. Unlike investment advisors these people have a bigger incentive to perform.
There are social factors to consider too. Are your stocks socially acceptable in terms of impact on people or the environment?
Finally there’s technology. Just consider computers which in a period of only 40 years shrunk from the size of a room full of hardware down to a few chips. Then look at the exponential progress in telecoms, as well as the biotech industry. Mobile phones have revolutionised our lives, yet they were not around 20 years ago. People in some countries would wait years for a land line but today they can by pass all that.
What all this means is economic growth, productivity growth world wide. A person in India or China, Brazil or Nigeria can now make products for world markets at a low entry cost using computers and the net. Our planet has shrunk thanks to air transport, communications with satellites etc. So business has grown. You now have the chance to take part in some of the most spectacular human events through investing.
The internet has made it possible to get the information that was previously only available to professionals. You can now check out companies simply by going to the financial sections of many sites and get all the advice you need to make a decision. You can watch large companies whose prices cycle up and down over a period allowing you to buy at a reasonable price, and decide when it's time to sell.
If in the end all this does not interest you and you want to hand your assets to financial advisors you still need to have a timely system of reporting to make sure that their priorities are your priorities too. You still need to take part in the investment decisions where your own money is concerned.
If you stick to Blue Chip companies your returns maybe lower but they will be safer and you will still participate in the ongoing growth of the economy. These companies are covered by just about every finance house as well as the press and all other news media so you are less likely to get any nasty surprises when it is too late to do anything about it.
The key to good performance is being reasonably proactive and following your investments at regular periods. Listing your holdings by date and price, you will be able to follow performance in absolute and comparative terms. Using a basic spread sheet you will be able to compare individual performance on a weekly or monthly basis and use a market relevant index as a reference. You will be in control and take the necessary action before it is too late. There's little point being told at the end of the year that your stocks underperformed the market. You will have wasted the opportunity to take corrective action in good time.
In your own work, you will be probably required to write a monthly report to your boss concerning performance on your objectives stating any deviations, as well as reasons and corrective action for the month to follow. This way you have a good chance of keeping things on track for the year end. Why not make a "report" to your self on your your investments as well?
With Blue Chips you do not have to rely on a single source of information. Others, much bigger than you are tracking performance and you can benefit from their work. Large companies are covered by financial advisors, banks, the press, the television and other sources on the Net.
Looking after a portfolio of shares can be fun too. You get to know about products, the sectors in which companies operate, and the political environment of countries and markets. You might invest on a sector where you have direct knowledge and maybe even in your own company. All of a sudden you can put to good use all kinds of information in the newspapers, TV, or the Net.
Putting all your investments on a sheet and focusing on them, is like running your own company. You have the investments, the products, the market, and the people running the products.
No other activity involves such a wide aspect of human endeavour as the investment field. Government changes, new tax and spending policies, interest rate changes, inflation, currencies, raw materials, energy, all have an impact on stocks. A flood, a hurricane, an earthquake, affect not only insurance companies but also the resources required to put things back as well as the impact on consummers.
There’s little that cannot be put to good use when you hold a portfolio of top companies. You may want to be in emerging markets but you know little about them. You can either go through a unit trust or find a company that trades in those markets and ride piggy back. Much safer to choose a local company and rely on their professionals. Unlike investment advisors these people have a bigger incentive to perform.
There are social factors to consider too. Are your stocks socially acceptable in terms of impact on people or the environment?
Finally there’s technology. Just consider computers which in a period of only 40 years shrunk from the size of a room full of hardware down to a few chips. Then look at the exponential progress in telecoms, as well as the biotech industry. Mobile phones have revolutionised our lives, yet they were not around 20 years ago. People in some countries would wait years for a land line but today they can by pass all that.
What all this means is economic growth, productivity growth world wide. A person in India or China, Brazil or Nigeria can now make products for world markets at a low entry cost using computers and the net. Our planet has shrunk thanks to air transport, communications with satellites etc. So business has grown. You now have the chance to take part in some of the most spectacular human events through investing.
The internet has made it possible to get the information that was previously only available to professionals. You can now check out companies simply by going to the financial sections of many sites and get all the advice you need to make a decision. You can watch large companies whose prices cycle up and down over a period allowing you to buy at a reasonable price, and decide when it's time to sell.
If in the end all this does not interest you and you want to hand your assets to financial advisors you still need to have a timely system of reporting to make sure that their priorities are your priorities too. You still need to take part in the investment decisions where your own money is concerned.
