Aseer_el_Shooq
09-12-02, 04:19 PM
I would like to give a brief idea about how most investors tend to invest in the stock market... so, I want to talk about the level of risk and how risk play an important fact in determining the level of equilibrium returns in stocks....first,risk is the chance that some unfavorable event will occur, which is loss most of the time. second, return is the extra money that you make from your investment.
most investors tend to go for the biggest fast return they can get, which they believe that they can find in the low priced stocks, which have an extreme risk. According to (Thomas W. Downs and Quan Wen, Journal of Portfolio Management, Fall 2001), 'extreme returns associate with low share prices'. But at the same time, the study showed that these stocks have an extreme risk. According to William J. O’Neil, “What are some of the worst habits investors have? One is an overwhelming attraction to low-priced stocks. The idea of buying a large block of a $2, $5, or $10 stock and watching it double sounds wonderful. The only problem is: your odds of winning the lottery may be better”.
SO, it depends on you if you like to go for the extreme risk that has a big return, but a small probability, or go for the low risk which has a small return which could be like a fixed deposit in the bank.
And, I would like to give an advise to anyone who would like to join the market, try to know the history of the company, it might help a little, but also take a shot and look at the company's financial statements and see how the company is doing from there...these might be not everything you can look for, but the easiest.. well, these days, you might find some people who are specialists in this field who can give you an idea about the companies, I know that this is offered here in the stock market in the US, specially for the big companies, but I don't know about the stock market in Oman. this is like a simple look at how some investors tend to invest.. again, I am not familiar with the stock market in Oman..
I hope that I made a clear understandable point of my topic.. and I wish to know more about the stock market in Oman if anyone has any idea about it..
most investors tend to go for the biggest fast return they can get, which they believe that they can find in the low priced stocks, which have an extreme risk. According to (Thomas W. Downs and Quan Wen, Journal of Portfolio Management, Fall 2001), 'extreme returns associate with low share prices'. But at the same time, the study showed that these stocks have an extreme risk. According to William J. O’Neil, “What are some of the worst habits investors have? One is an overwhelming attraction to low-priced stocks. The idea of buying a large block of a $2, $5, or $10 stock and watching it double sounds wonderful. The only problem is: your odds of winning the lottery may be better”.
SO, it depends on you if you like to go for the extreme risk that has a big return, but a small probability, or go for the low risk which has a small return which could be like a fixed deposit in the bank.
And, I would like to give an advise to anyone who would like to join the market, try to know the history of the company, it might help a little, but also take a shot and look at the company's financial statements and see how the company is doing from there...these might be not everything you can look for, but the easiest.. well, these days, you might find some people who are specialists in this field who can give you an idea about the companies, I know that this is offered here in the stock market in the US, specially for the big companies, but I don't know about the stock market in Oman. this is like a simple look at how some investors tend to invest.. again, I am not familiar with the stock market in Oman..
I hope that I made a clear understandable point of my topic.. and I wish to know more about the stock market in Oman if anyone has any idea about it..