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People who have invested in shares thought the proceeds could be earned overnight which is very wrong. Shares are a long term investment and the probability of getting proceeds is not guaranteed because it solely depends on the performance of the shares in the market. Many people are not properly advised when they buy shares because they assume the cost of any given share in the stock market will shoot one day.
What they don’t understand is that the price of shares in any trading counter is influenced by the rate of demand for that particular share. This is because people who buy shares in large amounts are able to manipulate the cost of shares because shares are sold by auction. The person who wishes to sell his/her shares quotes his price tag and the volume of shares that he/she is willing to sell.
People who want to buy shares and sell them too soon may not experience the benefits of long term investments. This is because the prices may go down immediately after an initial public offer. In fact in my opinion the cost of shares is usually high at the initial public offer hence I prefer to buy shares of a given company after it has traded for some time on the floor of stock market.
When one has shares trading in the stock market it is important to keep an eye on the changing prices of the shares. Some people ignore little gain in stock prices and they hope that the prices will continue going up thus they choose to wait.
Smart people sell their shares at the slightest increase of price as long as they don’t sell bellow the price that they bought those shares. The secret to success in trading with shares is to buy shares while their price is still low and sell them later when the price goes up.
It is advisable to involve someone who possesses the expertise in stock exchange to observe the buying and selling of one’s shares. This is because trading in shares requires a lot of time dedication and most people have other commitments hence there is need to hire a professional to sell and buy shares for an investor at the appropriate time.
The prices of shares are also influenced by political activities in any country. If the political situation in a state is stable; the price of shares will remain stable. Traders normally evaluate the situation prior to elections and the chances of eruption of violence and if the chances of a civil conflict are high the investors boycott from trading until the situation resumes to normal. The current advancement in information technology has enhanced the way people trade in shares.
Before technology was integrated into the stock market, buyers and sellers had to wait for several days before their transactions could be processed. Now that all the transactions are paperless the process of selling and buying shares has become instant at the click of a button.
This is because shares are stored in a computerized data base that are referred to as central depository system as opposed to early days when investors used to be issued with share certificates. The new technology has made it easier for investors to transfer their shares to a beneficiary and has led to the number of cases involving replacements of share certificates due to loss or damage.
When the price of shares goes down drastically investors believe that one day the lost glory of the industry will be recovered. Although shares may stabilize after declining for a given period, the prices may never reach the previous peak value. For instance my grandpa bought several shares from Barclays bank during the days of his youth. As of august 2007 the cost of those shares had increased by 100 percent.
This increase in price did not last long because they dropped by over 60 percent in the year that followed. Although at the moment the price of Barclays share is going up the upward trend is very slow. Therefore, investing in stocks requires the understanding of stock market operations.
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