From a long-term perspective, assessments should focus on the actual value of the company. Investors should evaluate the fundamentals of the company, as well as its business model, financial data, core competitiveness and defensible moat. In the long-run, the stock price trend will often increase in tandem with the company’s value for companies with high-growth and high-certainty fundamentals.
Read The Writing On The Wall
If you don’t sell at the right time, your stock value could stumble—and losses will start gaining on you.
Investors should first consider whether the company’s stock price is appropriate based on factors including fund flow tracking, market sentiment, capital flow trends and the opinions of mainstream analysts on the company’s fundamentals and target price predictions.
Short-sell volume data is another helpful indicator investors can leverage. Short selling means that investors borrow a large number of securities and then sell them at a high price in the market. If a stock has a high short-sale volume, this reveals investors are bearish on the stock price in the market outlook. If a stock’s short-sale volume rises sharply, the stock has a great chance of a short-term decline.
Just like horror movies, you can’t go wrong with sticking to the classics. Investors should consider selling when stock reaches the target price (or the price set when buying the stock, based on the trading strategy), regardless of whether they are making a profit or losing money. Additionally, if a company’s stock price far exceeds its actual value, investors should consider selling. Judging whether a stock is overvalued can be done by confirming whether the company’s fundamentals, macro policies and economic trends can support the continued rise of the stock price.
Find Your Allies
“Let’s split up, gang!”—It’s a bad idea in scary stories, and it’s a bad idea in investing, too.
Collaborating with others can lead to more strategic investment decisions. The essence of investment is “monetization of knowledge,” and knowledge comes from the collection and processing of information by a diverse set of minds, not just one.
Gaining perspectives from as many trusted sources as possible will give investors a more comprehensive understanding of an investment target and allow them to make strategic decisions through assessing what they’ve learned from others—especially experts in the field.
Don’t Get Spooked
It’s a scary world out there for investors, from unexpected market fluctuations to short squeezes. But by keeping these tricks up your sleeve, you can shift your investment journey from frightful to fruitful.
Fortunately, there are tools out there you can take with you on your journey that can help you obtain real-time market updates and insight from industry experts at all hours of the day—and night. Technology is your friend, and investment apps can offer you a one-stop shop to answer all your investing questions and needs. To get yourself started on the right foot, research different apps and choose the one that best suits your unique investment needs.
Arming yourself with the right tools to make smart investment decisions is critical, so that you won’t lose your head (or your holdings).
Carolyn Bao is vice president of marketing at Moomoo Inc. An indirect wholly-owned subsidiary of Futu Holdings Limited (Nasdaq: FUTU), Moomoo is an advanced technology company transforming the investing experience by offering a fully digitized brokerage and wealth management platform.