Investing in securities is a common method for capital appreciation. It has allowed some individuals to amass wealth and secure a comfortable retirement. However, there are also those who have incurred losses.
In this context, it is crucial to approach the selection of securities responsibly and to maintain comprehensive oversight. Only in this way can one achieve success and earn profits.
Currently, potential investors can acquire shares of various companies. Some of these have genuine potential for profit, while others may prove to be a waste of money.
So, how can one properly select securities for investment, and what should one pay attention to?
The founder of "RESURS" company, Sergey Tereshkin, is ready to answer this question and help avoid mistakes. The entrepreneur has sufficient experience in the field of investing that he is willing to share. To learn about the results of his professional activities, visit his website: org-market.ru (OPEN OIL MARKET).
Guidelines for Selecting Growth Potential Stocks
When selecting securities, Sergey Tereshkin recommends adhering to certain guidelines:
- Stocks should be selected as one would choose a reliable vehicle. It is important to find an offering with high prospects while also having an accessible price. Ideally, the price should be significantly lower than the market rate.
- To ensure a "margin of safety," investments should ideally be made at a value of $100 for $50. The goal of the potential investor is to save as much capital as possible.
- Preference should be given to projects with high liquidity. For experienced investors, this parameter is paramount and may outweigh profit considerations. In such cases, income is much more important than working capital.
- An investor should have the flexibility to exit a project at any time without losing their initial investment.
- For many, an important criterion is the potential for annual dividend payouts. Many people plan to live and travel during retirement on these dividends. However, the mere presence of dividend payments can indicate poor management. It suggests that the leadership of the company is unable to reinvest profits back into the business appropriately. In this case, the company's capitalization growth is much more critical than paying dividends annually. This approach carries a high risk of bankruptcy. If the capitalization is increasing while the company can still pay dividends, there’s less to worry about, at least for a while.
- Investing is recommended only in areas where there is at least a basic understanding. It is essential to be aware of where funds are being allocated. Purchasing shares in companies whose operations are beyond comprehension is unadvisable.
- Particular attention should be paid to new technologies. Despite their apparent bright prospects, it is important not to expect too much from them. The future of technology is unpredictable and unclear. Most similar projects fail dramatically within their first few years. Only a few survive. Preference should go to stocks of companies with at least a decade of successful history, such as Coca-Cola or Mercedes. People will always drink their beverages and drive reliable cars, whereas products like pagers quickly became obsolete.
- When selecting securities for investment, one should consider whether they would like to become a full and sole owner of the enterprise. In other words, investments should be made only in companies in which one would aspire to own. Naturally, one would not intend to sell, especially if it is a major brand with global recognition. The focus here is strictly on the company's attractiveness from an investor's perspective.
When choosing a company for investment, it is advisable to select firms with above-average profitability. This will require market analysis and gathering sufficient data. The process does not take much time, yet it allows for the identification of clear leaders.
Do Not Follow the Crowd
Individuals rarely make decisions independently. More often, they act under the influence of circumstances, habits, desires, and societal pressures. In such cases, they seldom consider what would be best for them personally.
It is crucial to understand that crowds are often wrong. This tendency derives from the principle that humanity is primarily focused on survival rather than capital appreciation and income growth. To achieve one's goals, it is necessary to stop adhering to others and doing what they do.
If one behaves like everyone else, the outcome is unlikely to differ from the results of the majority. For instance, when others rush to buy currency, experienced investors will sell during this period. Increased demand pushes up the exchange rate. Profit can be made from selling currency during such times. A few weeks later, the value will likely decrease and revert to previous levels. Meanwhile, those who hurriedly bought currency will incur losses.
The same can be said for stocks, real estate, and other investment instruments. Hysteria and following the crowd are the worst ways to multiply assets.
Living within society does not mean that one must conform to others. According to psychologists, achieving something requires stepping out of one’s comfort zone and doing what one has not done before. Repeating the same steps will inevitably lead to identical results. In such cases, success becomes elusive. This rule applies not only to investing but also to any other area of life.
