Blom Egypt Securities Website

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Getting started !

Choose your broker

The first step to start investing your money and trade in the stock market is to choose your brokerage firm, to chose your broker, you first have to define clearly your demands, or which services you are expecting the brokerage firm to provide you with, then you should know enough information about the company, its services, professional history, commissions, and how will you be paying for it.

Don’t rush! Explore the market well, before making up your mind!

Choose companies or stocks

An intelligent trader to invest in a certain security should empower him/herself with information. You have to know and learn about the company you invest in, from past records and future plans.

But first you have to determine your investment objectives, do u invest for long term financing for example you are planning for your retirement, or you invest for short-term financial needs.

Then you can come up with a list of the companies you want to invest in, your decisions or choices should be based on knowledge, Research companies you are intending to invest in. There is information available for every company that has stock offerings and you can almost always find some sort of financial information, management style, products offered, and its market position with respect to its competitors.  This can give you an insight on how the company is performing and possibly how well the stock will perform. Do not blindly purchase a stock, sometimes an individual might get lucky but more often than not, this will lead to very little returns or even the loss of all the money invested on that particular stock. You may also ask your broker their opinion on the stock that you plan to buy, they are there to help you in any way they can, remember, when you make money, they do too.

What can you get from a company’s income statement:

  • Earnings growth (earnings acceleration is even better). Does the company have a record of exceeding analysts' expectations? Earnings are considered by many investors to be the most important single number, the assumption being that earnings pave the way for future dividends.

  • Revenue growth.

  • Stable or increasing margins

  • Stable or increasing R&D spending as a percentage of sales (specifically for technology companies).

  • Tax abnormalities. For example, taxes below 25% usually mean the company is using tax loss carry-forwards against income, which are only a temporary earnings booster.

  • Number of common shares outstanding. Increases in the number of shares negatively impact earnings per share (issuance of new shares isn't necessarily bad; the important consideration is why they're doing it).

How to manage your portfolio

When you invest your money in stock market, the first consideration is how to minimize the risk of your portfolio. However, usually high risk implies high return, but this isn’t the case all the time, study the company well before investing, and always play for meaningful stakes.

The key to a lucrative portfolio is diversification, diversification is a portfolio strategy designed to reduce exposure to risk by combining a variety of investments, which are unlikely to all move in the same direction. The goal of diversification is to reduce the risk in a portfolio. Volatility is limited by the fact that not all asset classes or industries or individual companies move up and down in value at the same time or at the same rate. (Not all companies or sectors respond similarly to an event, one sector’s opportunity can be other sector’s threat). Diversification reduces both the upside and downside potential and allows for more consistent performance under a wide range of economic conditions.

Another factor that can reduce risk is time, your investment comfort zone should allow you to use a ‘‘buy and hold’’ strategy so that you are not chasing market returns during upswings, or fleeing from certain funds during downswings.

But keep in mind that investing too conservatively over the long term is also risky because your account may not grow enough to achieve your retirement savings goal, especially when you consider that inflation erodes your purchasing power over time.

Your time horizon directly affects your ability to sustain risk. The more time you have to invest, the more risk you can assume because early losses can be offset by later gains. However, if your time horizon is short and you experience losses you will not be able to recover from those losses by the time you need the money.


Date:08/09/2008 20:41:03