Ordinary shares as the tool of investment

Posted on July 4th, 2008 by admin, under Forex Bonds Options and Futures, Stocks.

This article describes ordinary shares and investments basics to Forex players.

Ordinary shares attract Forex investors for different reasons: it is an opportunity to earn much, if the rate will “fly up”, for owners of large packages of dividends can provide a permanent source of income. Considering variety of shares traded on the stock market (more than securities 20000 in U.S.) – it could be argued that whatever is investor’s objective, he could always pick up the paper, suitable for his investment strategy.

The basis of attractiveness of shares is that their owner is entitled to participate in profits of the company. Naturally, in case of rapid growth of company income rate of its shares also grows - the history of the stock market knows many examples when the stock price increases in the tens and hundreds of times by year or two. Bad aspect is that the investor is not only not guaranteed any level of profitability, but simply keeping enclosed means in safety. Stock market knows a lot of stories when strongest market falls and bankruptcies of largest companies such as the crisis of 1987 and 1999-2000 in USA, the Russian stock market collapse in May of 2006; Enron collapse and bankruptcy of YUKOS.

Stock indices - Dow Jones (S&P500,NASDAQ) have stable growing momentum in the long scale.

Difficulty, therefore, lies in correct selection of shares for inclusion in a portfolio of the investor.

 

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