5 tips for retail investors
Does the private investor have a chance against the pros? Of course not. But the small investor can, with limited time and effort, despite a fairly good picture of the market. Five basic rules and tips.
The interest rate decisions of the ECB have a direct impact on the economy and hence on the stock. If the Â interest rate falls Â down, then families can borrow cheaply and companies will be more likely to make additional investments and hence jobs. Families at a high interest rate will then keep its finger on the purse strings and companies will cut costs. Interest rates in other words say a lot about the health of the economy, and the healthier the economy, the higher the profits and hence share prices.
2. Government policy
If the government change statute then chances are that some sectors can exploit. if the goverment promote green energy then there are energy companies that will focus their interests. If there are many massive road works then there are certainly some companies that can benefit them.
3. Too good to be true?
Certain trends are too good to be true. Then do not let them carry you away in the enthusiasm of the moment and especially like the fundamentals in the eye. A good example is the hype about technology stocks a few years ago. At one point the shares soared high peaks, but high stock prices did not last long since they had nothing to do with the true value of companies. In that case you can rest assured that there is an abrupt end to the tale.
4. Look beyond the profit
Most investors look primarily to the relationship between the current share price and its underlying profits. But of course this says nothing about future profits. If a company suddenly grows large, this ratio will have barely value. To avoid this you better take into account the growth.
5. The investment cost
Stock trading has a price. So if you buy or sell stocks or mutual funds, you’d better know what costs you can expect from your financial institution. The better you can control costs, the more you love about your win
We’d like to thank Miss Sue Lang VEC on this amazing article.
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