Rule of diversification must be observed by investors while investing in stocks as it provides reduces the risk in case of unexpected volatility in the stock market.
Speaking during a webinar on investing and trading in stock market, Samer Abou Zaghla, QSE Education Manager, shed light on important points and explained about fundamentals that must be kept in mind by investors while investing in stock market.
Qatar Stock Exchange (QSE) yesterday organised a webinar on ‘Introduction to Trading on QSE’.
Addressing the webinar, Samer Abou Zaghla said that QSE is the second largest stock market in the region in terms of market capitalization.
Explaining about reasons to invest in the stock market, he said people invest in stock market for wealth creation, to reach their financial goals and to secure their future. Giving fundamental details, he said the capital of a company is formed of shares and a share is a unit of ownership in a company.
Holding shares in a company means that the investor owns a part of this company, thus letting them to enjoy the earnings that the company makes. Earnings and dividends play a big role in affecting the share market price.
Earnings Per Share (EPS), Dividends Per Share (DPS), Dividends yield (DY), Price to Earning Ratio (PE Ratio)are some important Earnings and Dividends ratios which should be taken into consideration before buying shares of a company.
Stressing on the concept of diversification, he said that instead of investing all the funds into share of one company, investors should put their money in multiple stocks. QSE for example offers 48 listed stocks and two ETFs distributed over seven sectors representing the Qatari economy.
Bonds, which are different from shares, are another instruments for investing. He said bonds are equal value and tradable securities issued by companies or governments, and they represent a long, medium or short term loan (according to the maturity date), whereby the issuing company or government undertakes to pay back its value and the interest due on it on specific dates.
He said investors should define their investment goals and make strategy. In stock market investors should not use that portion of savings that they do not expect to need in the short term.
Investors should not use all cash and must keep some cash for making averages when necessary. People should start investing as early as possible, even in small amounts.
