Investing in stocks: 2 suggests and 1 secret

Posted on September 18, 2017 in Insights by

stocksYou have decided to invest in the stock market: because you love the risk or because you want to earn or for some other reason yet. You have decided to invest in the stock market and wanted to understand how to invest in stocks. Yes, because the shares are the investment instrument for excellence.

How to choose stocks to buy

What are the best stock options to choose from? To make this choice you have to do an accurate study of your risk tolerance, also taking the cue from your past behaviors. Once you have decided how much to invest in stocks, based on all the reasoning you have made, you have to decide what to buy.

For this purpose, many theories help, the main ones being: fundamental analysis and technical analysis. Fundamental theory tells when to buy, hold or sell a stock based on growth prospects compared to competitors, budget data, pricing, and dividend. Business budgets, however, do not always correspond to reality, as it’s enough to put an active or passive outlook to see the end result change. There are also market emotions, so even in ideal conditions, the value of an stock may remain very low, perhaps falling below the purchase price.

Technical analysis deals with the historical price trend, and purchasing decisions (or sales) are based on forecasts. It’s not really that simple. What complicates things? The fact that the market (companies, private and institutional investors) probably uses the same tools, is observing and reacting, sometimes logically and sometimes illogically.

The secret of the IPO

IPOs are an excellent time to buy shares. It was with Facebook, then with Snapchat (both shares were sold immediately, however), it will be with Pirelli. The Italian company, led by its CEO Marco Tronchetti Provera, is working for an IPO in mid-September / early October. Analyst’s objectives and forecasts are positive.

The best IPO in 2017, according to investors, will be Pirelli IPO. The numbers say: The Irish Times speaks of Pirelli to overtake AIB with the largest European IPO this year, while The Street even offers a rating of 11 billion, in its article “Pirelli Reportedly Racing to Milan IPO Valued at Nearly $ 11 Billion.

This shows, on the other hand, that the convenience of investing during an IPO is definitely high in every aspect.

Two basic rules

Do not put all the eggs in the same basket: if it falls, they all break. So diversify: do not focus all your investment on one or few titles, choose sectors with different correlations between them and the market. Not to exaggerate, because it can complicate your life too much.

Do not forget about the stocks you own (your “portfolio”). Always keep an eye on how much you invest and respond when needed. Today, it is the only thing to do. Maybe ask for advice to an independent practitioner.