Investment Dos and Don’ts
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Understand the nature of stock market investing before you start to invest: read
Know how to understand and analyse corporate financial statements
Valuing shares: difference between “intrinsic value” and “market value”. Simple valuation metrics: P/E, EV/EBITDA, PSR, P/B, concept of comparative valuations. (Link to advanced topic on valuing companies)
You may wish to “paper trade” for a period, before starting
Don’t panic, learn from your mistakes
Diversify: don’t invest more in any one security than you can afford to lose
Have an investment strategy
Keep good records, so you can monitor performance of investments vs your expectations, and learn from your mistakes.
Monitor Your Investment and Attend General Meetings
One of the things that you should do as a shareholder in a company is to monitor what it is doing and ensure you read the information that it issues, particularly the Annual Report and Accounts. Go to this page for information on receiving Annual Reports from a company, and other news: Annual_Reports. In addition it is wise to attend the Annual General Meeting of companies in which you are invested so you can meet the directors, hear what they have to say and ask them questions. See General_Meetings for information on that.
Beware “tips” – research them thoroughly
Beware psychological biases
Keep a cash buffer
Network with other investors