‘Don’t invest what you are not prepared to lose’

JERMAINE DEANS, deputy general manager at JN Fund Managers Ltd, has some sound financial advice about investing on the stock market.

“Don’t invest what you are not prepared to lose,” he stated. He added: “Don’t put your life savings in the market as prices fluctuate. If you are not prepared to lose anything, then perhaps the market might not be the place for you.”

Deans said: “If you have done your fundamental analysis and you know a company is sound, but the share price is falling, don’t panic. You might even consider buying more shares.”

Ramon Small-Ferguson, chief investment strategist and head of research at JNFM, added that, “It is for stock market investors to have a long-term time horizon as share prices move up and down in the short term.”

“One critical investment rule is that I don’t invest in companies I don’t understand,” the investment strategist stated. “You will sleep better at night if you understand the factors behind a company’s development and the strengths of its management.”

It is also useful to build a portfolio of investments in which risk is distributed across different investment classes, Small-Ferguson stated. “Different stocks can appeal to investors based on their preference for those producing greater income or more capital appreciation. And, having a broad range of securities in a portfolio tends to iron out the gyrations in stock market values.”

Michael Johnson, senior marketing officer, Jamaica Stock Exchange (JSE), pointed out that the exchange benefited private companies and those investing in them.

“Since 2016, companies listing shares on the Jamaica Stock Exchange have raised more than $12.2 billion,” he said.

“They are not borrowing money, therefore, they are not accruing any debt. Instead, they are taking on investors as part owners.”

Investors can gain confidence from the fact that the JSE, which is regulated under the Securities Act, is there to protect them, Johnson stated. He added, “We also have a compensation fund, which is an insurance mechanism to protect investors.

Don’t invest what you are not prepared to lose ... . Don’t put your life savings in the market as prices fluctuate. If you are not prepared to lose anything, then perhaps the market might not be the place for you.

“Investors also need information to make good decisions, and we at the JSE provide that information,” the JSE representative said. “We provide a structured framework ensuring that Jamaica has a properly run market.”