Investing in the capital market promises abundant supply. Apart from the benefits of capital gains or the increase in stock value, capital market investors can also take profits from dividend distribution from stocks.
But keep in mind, stocks are an investment instrument that has a high risk. What’s more, when the economy is in turmoil like in the current pandemic.
Depend on fundamental and technical analysis
In investing stocks, a person can experience a risk of loss which, namely capital loss. Therefore, in investing in stocks, especially for beginners. It is very necessary to understand about these risks in advance. You also need to know two ways to analyze a stock, namely fundamental analysis and technical analysis.
Fundamental analysis generally emphasizes the analysis of a company’s performance. We analyze things that can move stock prices such as macro policies, micro policies, financial reports, industry potential, and the level of business competition and the company’s future business model.
In fundamental analysis, there is a top down analysis approach. Top down analysis first looks at the big picture about the company whose shares we are going to buy.
Through this approach, an investor can find out whether the condition of a company is generally good, and whether all components of the company can be considered good or vice versa.
For the next article, in order to take profits in stocks, we will present 4 important things in the top down analysis approach in conducting fundamental analysis.