In light of a macro scenario of general economic slowdown, investing wisely becomes much more challenging and investors need a compass to move on the stock markets. The AIAF believes it can contribute to addressing this context by offering people the following investment guidelines:
Favour floaters and high-liquidity
Invest the majority of the portfolio on floating and high liquidity shares. In cases of investment or disinvestment on limited-floating assets, in fact, the transaction can influence the trend in the price of the share and consequently the disinvestment of the position. The titles covered in the FTSE MIB, for example, respond to these characteristics.
Analyze the yield
Take into account the return on the share of the investment by analyzing the yield on the listing price. At the moment there are a number of equities that expect gross returns above 3% and therefore are clearly competitive compared to what is offered by European government bonds.
Read the research
Inquire, analyze (or at least read) the main research published on the individual companies in which you intend to invest. Moreover, keep an eye on relationships. The most important is the Price-Earnings or P/U ratio (the ratio between the market price of the share and earnings per share): too high a value indicates that the stock is already very much overvalued by the market.
Check traded volumes
Periodically check the traded volumes of the stocks that are to be purchased, because anomalous increases in the quantities traded intra-day may prefigure a particular interest by professional investors and their impacts on the share price.
“The analysis of the fundamentals is a compass that allows you to navigate even and especially in political and economic situations that prove challenging and difficult to read. For this reason AIAF, whose mission is to define shared standards in approaching financial analysis, has drawn up guidelines that can help investors to invest in stock markets, assuming that the investment is carried out in a medium-long perspective period and not in a speculative trading perspective “- underlined Alberto Borgia, President of AIAF – Italian Association for Financial Analysis.