Tips For Successful Stock Investing

Stock is a negotiable instrument issued by joint stock companies, representing the capital stock of the joint stock company. Limited partnerships whose capital is divided into stocks can also issue stocks, but these cannot be sold through public offering.

Cooperatives, on the other hand, can issue partnership deeds that do not qualify as negotiable instruments. If a company whose capital has not been fully paid goes bankrupt or is subject to liquidation, the stockholders may be asked for the part of their commitments that they have not yet paid for the company to pay its debts.

Thus, the person who transfers the stocks also takes over the same commitments. However, the financial responsibility of the stockholder arises from the commitment signed while participating in the establishment or capital increase, rather than just owning stocks.

A person who makes a portfolio investment without signing any commitment has no financial liability for the fully paid stocks he/she owns. The person who holds the registered stocks whose price has not been fully paid will be recorded in the stock ledger and will be obliged to pay the remaining price to the company.

On the other hand, the financial liability in question is limited to the nominal value of the bonds acquired due to establishment or capital increase. Default interest and penal terms and compensation included in the letter of the undertaking are excluded from this.

What Is a Stock And How Does It Work?


Stock is an investment instrument in the form of securities. In the stock market, stocks are also called paper.

These valuable papers, which contain stocks of the companies’ principal money, have been offered to the public. It is possible to buy and sell stocks through investment companies or banks. Some factors need to be taken into consideration when investing in stocks. Stock selection is one of the most important elements when investing.

It is possible to summarize the economic functions of stocks as follows:

a) Stocks provide the capital accumulation necessary for rapid development by bringing together the small savings of the masses in large enterprises.

b) Shares spread economic prosperity over a broad base by distributing the ownership of means of production and economic enterprises to large communities of people and provide a more balanced income distribution.

c) Shares complete the economic side of democracy by giving the people more or less a say in economic decisions.

d) While stocks provide additional income to people’s savings, they provide this not through interest, but through an investment that is resistant to inflation, appreciates with inflation, and protects the value of both investment and income against inflation.

e) Stock is a financing instrument that eliminates the intermediary.

When a company needs large amounts of funds as investment or working capital, no matter how it obtains these funds other than issuing stocks, it has an intermediary cost, and the type of financing with the highest intermediary cost is a bank loan.

Banks receive interest from loan transactions that is much higher than the deposit interest they give to the depositor when collecting deposits. Because the banking sector is a costly sector by nature.

What To Consider When Selecting Stocks?

Buying and selling stocks is one of the investment choices. It is possible to perform risk analysis when buying and selling stocks and gain more or less profit depending on the risk.

When purchasing stocks, research is done on the company, and evaluations are made through technical analysis. The risks involved in this investment are revealed. What should be considered when buying stocks?

Those new to stock investing should pay attention to the following points:

  • Choosing stocks of well-known, well-established companies,
  • Watching the value change for a while before buying the stock,
  • Browsing the company’s website, examining its balance sheets,

To monitor how much the stock value is affected by speculation and how consistently the company produces. The first value to look at when buying a stock is the real value of this paper.

The actual value may be lower or higher than the current value. The second element is market value. Market cap is the value at which the stock is currently trading.

Other important factors as following: 

  • Current rate,
  • Liquidity ratio,
  • Collection speed of receivables,
  • Stock melting rate,
  • The company’s debt burden,
  • Ability to cover interest expenses,
  • Net profit,
  • It is the active return ratio.

How To Conduct Fundamental And Technical Analysis And What Indicators To Use?

Indicators, which are indispensable assistants of technical analysis methods, can be grouped into different groups depending on the purpose they serve. However, it is located in the same menu on the trading platform.

Defining which groups each indicator is included in here does not have much practical benefit other than the literature requirements. However, we also find it useful to briefly mention some distinctions.

The group of indicators that try to inform the change of direction in the market before the events occur are generally called “leading indicators”. These types of indicators can use a lot of data that relates prices to demand, utilizes volume, and tries to predict the change in the buying or selling intensity in the market, that is, the direction of the price. 

On the other hand, “hindsight indicators” try to confirm the changing direction of the price and try to understand whether the current price change is a temporary situation or a long-term new beginning by using various methods such as the relationship between various price averages and the comparison of the short term with the long term.

In terms of the way it works, “trend indicators”, which try to understand the trend and whether the trend has changed direction, and “oscillators”, which try to detect buying and selling points by producing results from price oscillations, can be grouped. It is possible to see these titles grouped on platforms.

How To Build a Stock Portfolio?

stock investment

It is important how you diversify your portfolio on an asset basis, in other words, what percentage of your savings in your total portfolio you will allocate to stock investment. Similarly, your stock portfolio should include some degree of diversification to limit unsystematic risk.

The approach of investing all your savings in just one stock is an investment style that almost no professional would recommend. As in every business, it is best to proceed in investment not with hearsay information, but by drawing strength from your own experience and knowledge and trying to expand them.

Knowing what the company you invest in does and knowing the flow of its business will greatly increase your chances of success; Moreover, it will save you from losing your chance to succeed.

We all have a talent circle, and as we get to know companies, this circle gets wider and wider. No rule says you cannot learn the workings of a company or industry that you do not know until today. All you need to do is get some experience on how to do research.

It’s time to dive into the details of the companies you like and find investable! Balance Sheets, Income Statements, Activity Reports, etc. Examine how companies perform over the years in terms of revenue, profitability, debt, and asset status, and evaluate whether they have a sustainable competitive advantage.

It may not be easy to learn everything you can about all companies, but it is important at this stage to be able to identify details that can distinguish one company from another.

Famous hedge fund guru Jack Bogle said that financial markets are too complex to easily isolate a single variable like a scientific experiment. Therefore, when evaluating a single variable, never overlook the others and try to focus on the whole picture.

How To Manage Investor Psychology?

The fact that people want to take more risks after making a profit is known as the “easy money effect”, the fact that people want to take less risk after experiencing a loss is known as the “snake bite effect”, and the fact that losers want to take chances to recover their losses instead of avoiding risks is known as the “break-even effect”. 

Ownership and status quo effects also express how risk-taking behavior may vary depending on how a financial gain is achieved. According to the findings of financial advisors, individuals who receive $ 100,000 as a year-end bonus evaluate this amount in the stock market, while when they receive an inheritance of the same amount, they evaluate it more as a certificate of deposit, because they do not find it right to take risks with the wealth that their parents have accumulated by working hard. 

Another factor that affects risk-taking behavior is our genetic structure. Several studies on this subject include surveys, experiments, and real financial asset investments.

See you in the next post,