The market value of the investment portfolio consisting of common stocks that throughout a number of years subjected to considerable fluctuations. And the person investing in stock market should know about such price fluctuations and should be ready to them both financially, and psychologically.
Quite normally to have desire to earn on stock market fluctuations, both by means of usual growth of a stock price and by means of purchase and sale of securities on beneficial price. But the natural desire to receive some income can have very serious consequences if the person takes part in speculative operations.
To advise to be kept from speculative activity easily, it is much heavier to follow this advice. In itself gamble in stock market isn’t neither illegal, nor immoral. But if you want to speculate, do it with open eyes realizing that you can lose money, eventually. Allocate for this purpose separate part of the capital and place it on the separate account.
Never fill up money funds on this account for that simple reason that the market grows, so, your profit grows also. Also be assured that you have rigidly enough limited risks and have accurately separated from speculative operations your investment. Having desire to earn on price fluctuations of stock market, the person chooses one of two methods: taming and price.
Timing is an aspiration to expect market fluctuation to buy or abstain from sale of shares if rate growth and on the contrary is supposed, – to sell or abstain from purchasing at expectational decrease in a rate.
Price is when you try to take shares when their price is established much more low their true cost, and to sell when their rate exceeds true cost it is less simple form of a price method the analysis of acts, whether you overpay too much for shares at their purchasing.
It happens quite enough for the passive investor who has some intentions to own shares throughout the long period of time. It is that minimum which is necessary for carrying out of investment operation. We are convinced that any price method of investment can bring to the reasonable investor satisfactory results. We are assured that having preferred taming for the purpose of forecasting of a condition of stock market, it, eventually, becomes the speculator.
There is one more aspect in philosophy of timing which seems, nobody considers. Timing has very important psychological value for the speculator as last wants to get the profit very quickly. The idea to wait year while shares will grow in the price, for it is simply intolerable. For the investor necessity to wait any time at all isn’t depressing. He has other motives for investment.
The investor will receive benefit only in the event that, having waited that time he can take its interesting shares on much lower price that compensates unsatisfied dividends later. Thus, timing if it isn’t connected with price method doesn’t represent the present value for the investor.
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