Stock investments are largely known and simple to undertake. Nowadays, many investors just follow the crowd and invest in stock without taking time to study and advantages and otherwise of owing status. Others are also tempted by the big status and presence of the firms offering the stocks. Thus many are swayed to purchasing stocks of firms because of the prestige of being a number of the corporation. Few have sought to find out how safe their stock investment were. The page outlines the danger of holding stocks and how to safe your investments in stocks if you are have one.
Stock investments are extremely volatile. This is due to the economic conditions in countries and attached to demand and supply. The worth of a stock among others is determined by the guesses of investors about the potential of the firm. By so doing, some stocks are over-priced whilst others are very under priced. In an efficient market, the forces of supply and demand will push these full prices to their equilibrium. By doing so, some investors will increase whilst others will lose, sometimes significantly. This has accounted for the up and down action of stock prices over the years.
Another factor why stock investment is unsafe is the uncertainly of dividend payments. Dividends are paid to shareholder at the closing stage of the accounting period. Some of these divided payments are attached to the company’s dividend policy. Anyway, board of directors through yearly general meetings can encourage the investors when they cannot pay dividends. They may come out with stories such as finding an extremely best opportunity to invest which may outcome in higher worth for the firm. Since many of the huge investors will want divided gains as an outcome of the appreciation in the share value, they sometimes vote to agree refusing the little stock holders nothing for the year. More often than not, most of these promised future returns never appear, all to the disadvantages of stock investors.
Further, analysis carried out by stock brokers and best intentions for their clients, most of these target firms for investments because of unexpected circumstances such as sudden change in management, mismanagement, wars, earthquakes, tsunamis, etc, are never capable to pay dividends or appreciate in worth. Investors in this type condition will never enjoy their stocks investments.
Stocks are best commodities to invest in especially when you do have a lot of funds for investment. Anyway, irrespective of the amount of money at your disposal, you can safe your stock investment with the techniques above knowing very well the danger that stock investments pose.