Investors urged to look for investment opportunities but do the necessary due diligence
THE year 2024 is an opportunity for investment but according to Delories Jones, senior vice-president, sales and marketing at JN Fund Managers, investors should do their necessary research prior to investing.
“Fundamental analysis should be done on the companies by looking at their earnings, assets, liabilities, and cash flows. The investor should also look at the stock from a technical standpoint; examine the price and volume performance over the last few months and possibly years, depending on the circumstance,” she cautioned investors.
Stable Long-Term Earnings
She further added that investors should satisfy themselves that the company’s earnings will be stable over the long term and that the company is not racking up significant debt, which they may find difficult to repay.
Jones cautioned that regardless of how good these stocks appear to be at face value, the risks are still quite high for local equities at this time; as such, investors are advised to diversify their portfolio and take a long-term view, at least three years, when investing in stocks.
She explained: “You have to separate stock purchases by industry, as you do not want to place all [your] funds in a manufacturing sector per se, as if that sector gets hit, then it will affect your entire portfolio. You may want to diversify your portfolio across various industries, such as manufacturing, retail, telecommunications, finance, among other areas.”
In addition, she noted that investors need to diversify across asset classes, whether it is fixed income, equity, money market, real estate, and even alternative investments.
She continued, “In fact, we at JN Fund Managers recommend that collective investment schemes, such as mutual funds, are more appropriate for most investors. There is a lot of time, work and expertise required to conduct appropriate and effective company analysis. It is not beyond the ability of most persons, but the time and effort required is substantial. For example, by investing in the Global Equity Fund offered by JN Fund Managers, investors are able to participate in IPOs that the JN Fund Managers’ team deem to provide acceptable risk-adjusted returns and achieves an acceptable level of diversification, knowing that a competent team of investment professionals manage the portfolio on their behalf.”
Other matters to consider when investing are:
• How could this investment help you meet your investment objective and how it fits into your overall strategy?
• How does the company make money?
• What are the company’s key products or services?
• The potential risks and rewards associated with investing in the company.
An investor should understand that there are risks associated with investing, while you can have big gains, the losses can be equally big. This makes it even more important to ensure that you diversify your portfolio in terms of industries and asset classes.