Investing in Stocks

There are a few concerns which must be addressed when people begin activating their investment strategy:

1. Where is the reliable source of information, they need to evaluate their potential investments. Even though there is more accurate information ate hand than most people are able to read. Their solution is to begin investing without doing any research at all.
2. Thus, we come to the second concern. They worry about their lack of skill understanding the information they find.
   1. Is the increase is sales revenue a good sign for a corporation? (yes)
   1. Should a firms profits increase or decrease over time? (Increase)

The Psychology of Investing in stocks

Do you know that for almost 100 years stocks have returned an average of a bit under 10%a year. This 9% investment risk is above the national inflation rate. The long and short of it is that investors who’s goal is the higher returns often chose stocks. If you are one considering this fact then you should recall three facts:

1. The value of stocks can also decrease. (Thus, we had many fearing the beginning of a worldwide epidemic sell their stocks at depressed prices at the beginning of Coronavirus.

The Hawaii fires cause many poachers to do what is called a land-grab.

Lower sales and lower prices mean lower profits or possibly no profits which cause the stocks in the company to decrease.

Walmart advertises lower prices. A wise consumer may what to do their research to discover at what cost does this illusion of lower cost come.

• What is the risk of investing in stocks. No investment is guaranteed. The fact is that stock are used as an example for the risk to return ratio used by many.

The lower the risk, the lower the return.

 Thus, accepting the higher risk permits one to pursue the larger returns.

• The key for any investment program is allowing your investments to work for you over a long period of time. In spite of the fact some investors make profit in the short term these same people often lose the profits they earned over time. There are no exceptions. The long-term investment strategy allows you to ride through the tough times and enjoy the benefits of the good times.

Corporation Issue Common Stocks. Why?

1. Equity financing money received through the sale of an owner’s sale of share of their ownership of their business. The main reason many owners prefer common stocks is that the money obtained from their investors doesn’t need to be repaid and the company is under no obligation to buy back their issued stock. Yet the stockholder may choose to sell of portions of the stock they have obtained to other investors for greater profits.
2. Dividends are not mandatory. Dividends are paid out of a corporation’s profits but they must be approved by the corporation’s board of directors. Most corporation distribute between 30 and 70% of their earnings to stockholders. However rapidly growing company such as Amazon and Alphabet lean toward no returns so as use their profits on Research and development, expansions and other major projects.
3. Voting Rights and Control of the company. In the return for financing the company the management or owners must accept conceptions to its stockholders which do restrict corporate policies.
4. Corporations must hold annual meetings where stockholders have the right to vote. They have the ability to vote in or out new management and they must approve major changes to corporate policies. There are two methods for acquiring income from stacks:
5. From dividends
6. The apperception of a stock’s value

Preferred Stock is a type of stock which receives its dividends before common stockholder can receive theirs. Yet you must remember dividends are not a right and therefore can be withheld. Preferred stock is preferred by individuals who demand a more predictable type of income.

Although do not have a legal dept which must be repaid if the firm is dissolved or declared bankruptcy. Yet their claim to first rights to corporate assets after creditors and bondholder the latter two generally consume the assets.

The bottom line is to invest in any corporation You must do your research.

Note: Images on this blog site are from a free source or taken by the author. No image or group of photos is intended to represent the people the author serves. The author does not care about Race (that is a politically correct term that he does not like because we are all of the same Race, the Human Race. He prefers the term ethnicity), color, religion, sex, gender, marital status, disability, genetic information, national origin, source of income, Veteran or military status, ancestry, citizenship, primary language or immigration status. He is a service provider for all people. We will all rise together when we band together and help one another. Joseph Erwin is a Real Estate Broker, DRE # O2131799, and a CA general contractor # B 696662. He’s a member of the CRMLS and The East Valley Association of Realtors located in the Inland Empire region of Southern California.