The Basics of Investment Principles

1 Mar


The basic principles of investing are clear :- buy at a lower price than you sell, minimise losses in downturns and make the best risk adjusted returns based on your attitude to investment risk.


What drives share prices?

The share price of companies is driven by two key factors:-

  1. Sentiment – emotional responses such as fear and greed.
  2. Fundamentals – the hard evidence such as the earnings a company is making and whether those earnings are rising or falling.

Sentiment, especially in more recent times, drives markets in the short-term, and fundamentals in the long-term. So,the question you must ask is how to balance these two factors, and accept they may be acting opposite to one another at any given time.


Equity Fundamentals

We are now in a market cycle where it is very unclear where the future of the markets and individual share prices will drive valuations. So can you plan long-term? Or, Should you ?

I would say yes, but this requires the balancing of asset classes and attitudes to determine how best to invest, styles, approaches and timescales.

When investing always consider your driving forces and worries. This is so that you can live well with your decisions and make a healthy profit, within these constraints.


Any questions, please ask, my email address is :-


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