A proper assessment of the investment in shares should consider a means horizontea long term, given the potential to add value to shareholders through dividend payments, endowment of corporations and profit from their sale.
Being obvious that investment in equity presents opportunities, it is no less true that investing in stocks is not without risk and volatility, investors continue to face many uncertainties, which in many cases can end up with unexpected losses. In addition to the increased volatility, increased risk of fluctuations in the price, investing in stocks involves a greater risk to the shareholder in the event of insolvency or bankruptcy of the company, in these circumstances, the company should be liquidated and ordinary shareholders be placed in last place in the division with respect to bondholders and other creditors.
Therefore, in the case of this financial instrument is absolutely crucial to know and appreciate their essential characteristics, so that the investor can marry potential risk levels and profitability inherent in such assets with their ability to withstand losses and profitability objectives and the time horizon of your investment.
Finally, it is important to understand the variables that influence the valuation of shares: corporate earnings, interest rates, economic data, etc. Your knowledge and follow-up will allow the investor a more prudent and efficient, generating investment ideas more discretion and based on their own expectations management.
Before making investment decisions in stock market, investors should analyze in detail its profitability targets, its ability to withstand temporary losses and investment horizon (short, medium or long term), to plan in detail a strategy consistent with said characteristics.
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