Stock. Golden Rules for Successful Investing
Rule #2. Focus on stocks with high earnings and sales growth. High profitability with low risk is the key to success
Virtually all large companies grow their sales, profits and earnings every year. Follow the share prices of Apple, Microsoft, Nvidia, Amazon, Alphabet, American Express, General Motors, UPS, Johnson & Johnson, Mastercard and Walmart and you'll see that this is a rule with no exceptions. The same goes for "new products" (goods and services) that are just entering the market. Look at stocks of well-known companies that have recently undergone a management update. Consider stocks of companies that have recently completed an initial public offering (IPO). It is important not only to look at past performance, but also to conduct a thorough analysis of the company's prospects and fundamentals.
Virtually all large companies grow their sales, profits and earnings every year. Follow the share prices of Apple, Microsoft, Nvidia, Amazon, Alphabet, American Express, General Motors, UPS, Johnson & Johnson, Mastercard and Walmart and you'll see that this is a rule with no exceptions. The same goes for "new products" (goods and services) that are just entering the market. Look at stocks of well-known companies that have recently undergone a management update. Consider stocks of companies that have recently completed an initial public offering (IPO). It is important not only to look at past performance, but also to conduct a thorough analysis of the company's prospects and fundamentals.
Rule #3: Institutional support. Never invest in a business you do not understand
Buy stocks that are actively bought by large institutional investors - investment funds, pension funds, banks. Their actions can act as a kind of bellwether. Look for stocks that large investors are aggressively dumping en masse. This may be due to changing industry trends or problems at the holding company. But remember that investing is always risky, and even the decisions of big players can sometimes turn out to be wrong.
Rule #4. Market trends: buy stocks when there is a strong upward trend. Invest for the long term
The 100-year history of the stock market shows that three out of four stocks follow the trend of an index: either up or down. When evaluating stocks, it's important to follow the trend over time.
If a stock is rising in price (trending up), its value will continue to increase - time to buy. If the market is weakening (prices are falling), you need to minimise your risk - sell to avoid losses.
Buy stocks that are actively bought by large institutional investors - investment funds, pension funds, banks. Their actions can act as a kind of bellwether. Look for stocks that large investors are aggressively dumping en masse. This may be due to changing industry trends or problems at the holding company. But remember that investing is always risky, and even the decisions of big players can sometimes turn out to be wrong.
Rule #4. Market trends: buy stocks when there is a strong upward trend. Invest for the long term
The 100-year history of the stock market shows that three out of four stocks follow the trend of an index: either up or down. When evaluating stocks, it's important to follow the trend over time.
If a stock is rising in price (trending up), its value will continue to increase - time to buy. If the market is weakening (prices are falling), you need to minimise your risk - sell to avoid losses.
The shares of reliable, stable companies grow in value over time. However, when analysing potential rewards, it is important to take into account possible risks. First of all, we would like to remind novice investors: buy shares at the right time by choosing the right time in the market. Avoid emotional decisions: panic and euphoria can cost you dearly, and market turbulence is inevitable. Planning, patience and calm are key elements of successful investing.
Economic conditions and market trends can change very quickly. Therefore, review your portfolio regularly, diversify your risks and do not invest in any one company or industry.
Rule #1. Don't invest in what you don't understand. Do your homework on the companies you want to invest in.
If profits fall, a strong competitor emerges, or there is a change in dividend policy, structure or management, a company's profitability will fall, and so will its share price. Assets that an investor has little or no knowledge of can be a risky investment for them. Even if you use the services of a broker, it is important to make at least a general assessment of the target company's business model and competitiveness. It is worth looking at published accounts, balance sheets, profitability, debt levels and other key indicators.
Blue chip stocks are very popular among novice investors. These are large-capitalisation companies - well-known world leaders that consistently pay dividends to their investors and weather crises well. The returns on such investments are not high, but the risks are minimal.
Economic conditions and market trends can change very quickly. Therefore, review your portfolio regularly, diversify your risks and do not invest in any one company or industry.
Rule #1. Don't invest in what you don't understand. Do your homework on the companies you want to invest in.
If profits fall, a strong competitor emerges, or there is a change in dividend policy, structure or management, a company's profitability will fall, and so will its share price. Assets that an investor has little or no knowledge of can be a risky investment for them. Even if you use the services of a broker, it is important to make at least a general assessment of the target company's business model and competitiveness. It is worth looking at published accounts, balance sheets, profitability, debt levels and other key indicators.
Blue chip stocks are very popular among novice investors. These are large-capitalisation companies - well-known world leaders that consistently pay dividends to their investors and weather crises well. The returns on such investments are not high, but the risks are minimal.
Rule #5. Risk Management and Investment Discipline: Profit and Loss Limits
An investor should determine in advance the "limiters" on prices, the maximum level of profit and loss. This approach helps to minimise losses. The investment rules provide for taking most of the profit (take profit) at the level of 20% to 25% and reducing losses at the level of 7% to 8%.
No one has ever gone bankrupt by taking profits. You will not go bankrupt as long as your profits exceed your losses. If the share price rises by 20-25% or so, an investor should consider selling, partially or fully exiting the position to take profits. If the share price falls by 8%, an investor may decide to sell the stock to minimise losses. Stop Loss orders automatically close a position when the price reaches a predetermined level. This helps to limit losses in the event of adverse price movements.
A rise in the moving averages - averages of stocks over the last 20, 50 and 200 days - can indicate a strengthening positive trend, i.e. the stock is moving up. If prices deviate sharply upwards from these lines, it is likely that the current value of the stock is overvalued: the market is preparing for a correction or price fall. If some stocks are being praised more than usual in publications, social media and forums, it's a reason to think that the final upswing is near.
"Beware of investment activity that elicits applause; big moves are usually met with silence" Warren Buffett
Eifos Hub's financial advisors develop personalised investment strategies based on clients' financial goals and risk preferences. Portfolio management is carried out by the firm's portfolio managers. Eifos Hub carries out volumetric analysis of assets (liquidity analysis) and assesses the company's investment opportunities.
An investor should determine in advance the "limiters" on prices, the maximum level of profit and loss. This approach helps to minimise losses. The investment rules provide for taking most of the profit (take profit) at the level of 20% to 25% and reducing losses at the level of 7% to 8%.
No one has ever gone bankrupt by taking profits. You will not go bankrupt as long as your profits exceed your losses. If the share price rises by 20-25% or so, an investor should consider selling, partially or fully exiting the position to take profits. If the share price falls by 8%, an investor may decide to sell the stock to minimise losses. Stop Loss orders automatically close a position when the price reaches a predetermined level. This helps to limit losses in the event of adverse price movements.
A rise in the moving averages - averages of stocks over the last 20, 50 and 200 days - can indicate a strengthening positive trend, i.e. the stock is moving up. If prices deviate sharply upwards from these lines, it is likely that the current value of the stock is overvalued: the market is preparing for a correction or price fall. If some stocks are being praised more than usual in publications, social media and forums, it's a reason to think that the final upswing is near.
"Beware of investment activity that elicits applause; big moves are usually met with silence" Warren Buffett
Eifos Hub's financial advisors develop personalised investment strategies based on clients' financial goals and risk preferences. Portfolio management is carried out by the firm's portfolio managers. Eifos Hub carries out volumetric analysis of assets (liquidity analysis) and assesses the company's investment opportunities.
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