{"id":9790,"date":"2023-08-07T15:17:28","date_gmt":"2023-08-07T15:17:28","guid":{"rendered":"https:\/\/isafespend.com\/investing\/three-quick-tips-for-investing-in-companies\/"},"modified":"2023-08-07T15:17:29","modified_gmt":"2023-08-07T15:17:29","slug":"three-quick-tips-for-investing-in-companies","status":"publish","type":"post","link":"https:\/\/isafespend.com\/?p=9790","title":{"rendered":"Three Quick Tips For Investing In Companies"},"content":{"rendered":"
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In this day and age of social media dominance, it seems we absorb more headlines than actual numbers and facts. The daily flood of news has escalated the term \u201cbehavioral finance,\u201d a theory that people\u2019s biases and emotions influence and trigger their investment decisions, to new extremes. At the end of the day, many of the market gyrations and volatility can be avoided if investors take the time to evaluate a company before racing to sell when a breaking news banner lights up the lock screen. Here are three of our tips for investing in the company and not the hot-and-cold headlines.<\/span><\/p>\n

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  1. Unless you are at or near retirement, you are investing for the long term. <\/strong>If you invested $1,000 in Facebook on May 18, 2012, the day of its initial public offering (IPO), you would now have an investment worth just under $5,000 \u2013 a total return of nearly 400%! However, if you saw the headlines in June 2013 that highlighted the newly public company\u2019s depressing -35% return since its IPO and jumped to sell, you would be kicking yourself when the 2014 headlines began boasting Facebook\u2019s upcoming growth and potential that catapulted the stock onto the levels we associate with it today. Now, let\u2019s say you stayed calm and weathered those early storms for the stock but in June 2018 raced to sell in light of the data breaching news; you would again be kicking yourself when you saw the headlines this year flashing Facebook rebounding back 25%. The moral of the story: Unless you have an immediate need for cash, stay invested!<\/span>
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  2. News sources always emphasize the negatives and downplay the positives. <\/strong>For example, let\u2019s take a recent headline from MarketWatch <\/em>on October 26: \u201cAmazon earnings fall for first time in more than two years, stock drops in late trading\u201d or CNBC<\/em>\u2019s more extreme version on October 24: \u201cAmazon clobbered after a miss on the bottom line and soft guidance.\u201d At first glance, you may see these headlines, and if you\u2019re a shareholder, feel a sudden sense of panic, especially upon reading the word \u201cclobbered\u201d in reference to one of your investments. You may even rush to sell some of your shares in an attempt to hedge this impending stock massacre. Now, let\u2019s take a look at the actual numbers. The reality: Yes, on October 24, the stock did in fact drop about 9% after the company released its earnings that showed the company falling short of expectations and projected lower fourth-quarter growth than previously predicted; however, the company\u2019s revenue also grew 24% for the quarter, showing that Amazon\u2019s heavy investment in free one-day shipping is proving worthwhile. A mere day later, the stock had already jumped back up 7%. All in all, Amazon is here to stay and occasional dips are normal at times \u2013 growing pains apply to companies too!<\/span>
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  3. \u201cBreaking News\u201d is fleeting. <\/strong>You see these notifications from news sources all too often (I just looked down at my phone for reference and have 59 \u201cBreaking News\u201d notification banners from CNBC<\/em> this weekend): CNBC <\/em>Breaking News: \u201cU.S. and China are close to finalizing some sections of trade deal, U.S. representatives say;\u201d CNN <\/em>Breaking News: \u201cThe trade war is destroying American profit;\u201d MarketWatch<\/em> Breaking News: \u201cThis unexpected trade-war outcome will send stocks soaring.\u201d These three very conflicting headlines came within three days of each other \u2013 quite the roller coaster of financial emotions! The reality: News headlines flood our phone screens and inboxes excessively with the next new opinions and insights because that is the nature of those industries. Take every headline with a grain of salt, and don\u2019t panic every time you see a breaking news headline that could potentially impact your investments. The markets are weathered for these fluctuations, and history has shown us that the markets always bounce back.<\/span><\/li>\n<\/ol>\n
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    Overall, remember the markets are not a one-way street. Companies will inevitably see fluctuations in their stocks on a regular basis, which is simply a reality of normal market behavior. The history of the market has shown us that investing pays off, and we need to remind ourselves to occasionally block out the short-lived noise and banter that this era of social media brings.\u00a0<\/span><\/p>\n<\/div>\n<\/div>\n