The recommendations are free, the losses are yours Listen to the opinions of another, if you think so, but take it as that, as opinions. The convenient thing is to analyze the investments and the values from the information and own perspectives. “Because if everything goes wrong, the recommendation guy will tell you that the fundamentals haven’t changed and you’re left with a hole in your pocket.
Think about how much you can lose before thinking about what you can win To make a risk-benefit analysis, bank analysts tend to overestimate the future profits of companies between 10% and 15%. If you assume a potential loss of 20% in a year, for example, the potential gain should be at least 40% to make the risk-reward attractive. Always invest the money you have left over. Emergencies are bad advisers. Scale your bets It is the best option for those who are looking for a long term. This means that those who invest several years ahead, should consider the possibility of increasing positions if bad times come. If not, the rebounds will not give you profit. They will only serve to mitigate losses.
Beware of the “older fool” theory that the Chinese or the Russians
are going to come to buy this or that must be quarantined. Or even worse, the phrase: “It’s so cheap that they’re going to buy it at any moment.” Beware of thinking that a corporate rumor is true, because in most cases it is not and contains more risk than potential benefit.
10 golden rules when investing in the Stock Market
Beware of value traps
For example, a company that traded at a PER of 12 times and now does so with one of 8 times, being the same business and the same management team, can enclose a value trap that makes it to lose money. This is so because the company sometimes destroys value for the shareholder through megalomaniac purchases or through unnecessary investments with very poor returns. 9.- Buy a security for what it is, not because the banks or managers would like it to be Many times, we tend to highlight the areas that are irrelevant because they are not the ones that generate the majority of the company’s profitability. This is logical as sellers, but the buyer should know that in many companies, the impact is explained by what we do not like to comment on. Read Also: Wpc2025
Alignment of corporate interests with shareholders Why on many occasions do companies do better on the stock market where the managers have a very high clct stock of their fortune and their remuneration linked to that value? Because they take care of the money they spend. For this reason, it is necessary to distinguish between managers-entrepreneurs who are majority owners of their company from managers-employees-VIPs, who can create value in many cases but can also feed their ego with the shareholder’s money.
