In an investment, it is critical to make appropriate decisions that are relevant to the business. The essence of this is to minimize the risks and ensure that the business is on a steady path. The investor has, therefore, to consider following some guidelines that ensure that a proper forecast of the investment is done to ensure that there are no such issues, poor returns on investments (Matthäus-Maier, et al, 2007). The guidelines that are relevant for aggressive equity investors and conservative equity investors for investment decision forms the basis of evaluation in this paper.
The guidelines for conservative equity investors for investment in decision-making are varied and diverse. A guideline that an investor should consider is buying of shares. Some shares pose a risk to an investor largely. The shares that are not listed are not appropriate for an investor (Matthäus-Maier, et al, 2007). Case in point is that shares that are not listed are risky in the sense that there is no security for them. Shares that have security are those that are listed with some companies with some portfolio incentives. Besides, there are companies that manipulate the shares to the extent that the shares that are flouted before the public issue becomes different from those being offered in the market. An investor has to consider sharing that is listed.
A Conservative equity investor should consider the shares that have stiff necessities. Such shares are not easily prone to risks (Reilly et al, 2012). Furthermore, shares that are competitive in the market are better. A conservative investor should consider the shares that have a higher turnover. This in essence means that there are some relative strict shares traded on. It is critical to note that when shares have stiff necessities, it makes it difficult for stockbrokers and other unscrupulous executives to manipulate or flout the prices of the shares. This guideline is of necessity in the sense that it makes it possible for an investor to make the appropriate decisions.
A critical factor that is often ignored by a number of investors is consulting an investor. A conservative equity investor should be able to seek some advice from an investment portfolio consultant (Reilly et al, 2012). This makes it possible to understand the prevailing circumstances in the stock market. This makes it possible for the investor to make the appropriate decision based on the forecast done on the market numbers. Consequently, the conservative equity investor should consider relatively better market in the market. At times, volatility in the market can be a serious issue of concern. It is, therefore, critical that the investor looks at the secondary and the primary markets. Based on proper forecasting, an investor should consider the most appropriate market for investment.
The guidelines for an aggressive equity investor are a bit different though interesting. An investor in this category should endeavor to take up understandable investments. To this extent, the investor should resist the temptations of falling to market pressures and do the things within the limits (Reilly et al, 2012). This helps in avoiding unnecessary moves that can prove costly. The investor should be able to discern the market as appropriate better than the investment company should. Areas of concentrations should be considered based on either value or growth.
An aggressive equity investor should be able to study the market appropriately and be able to understand the market dynamics. This helps in understanding whether the market forces are favorable for investment (Wilcox et al, 2013). Largely, it becomes possible to make a decision based on the prevailing market circumstances. In this regard, two components are inevitable. When the primary market is sluggish, the investor can decide to go to the secondary market. Consequently, market volatility should inform the basis over which an investor gets into the market.
An aggressive equity investor should be able to know the projected earnings from the shares. In some circumstances, companies manipulate the earnings to the extent that the dividends payable to the shareholders are less than the expected value. When an investor is able to anticipate the earnings appropriately, it becomes easier to know whether to take up an investment or rescind the decision (Wilcox et al, 2013). In the same breath, the investor should be able to take up actions as quickly as possible to ensure that nothing goes so wrong prompting a rushed decision. When there is a realization that an occurrence in the market is likely to affect the investment, it is necessary to come up with a plan that includes selling of the shares or pulling off from the market.
Guidelines are critical for both conservative and aggressive equity investors. Guidelines prompt better decision-making. It is, therefore, appropriate for any investor to consider the guidelines as a stepping-stone towards making a concrete decision. For conservative equity investors, the guidelines of critical considerations should be the shares to be bought, contacting a consultant and shares with stiff necessities. On the other hand, aggressive investors should consider knowing the market well, correctly discerning the market properly and getting to know the earnings in advance. These guidelines form the basis for better decision making in the investment portfolio.
Matthäus-Maier, I., Von, P. J. D., & KfW Entwicklungsbank. (2007). Microfinance investment
Funds: Leveraging private capital for economic growth and poverty reduction. Berlin: Springer.
Reilly, F. K., & Brown, K. C. (2012). Investment analysis and portfolio management. Mason,
Ohio: South-Western Cengage Learning.
Wilcox, J. W., & Fabozzi, F. J. (2013). Financial Advice and Investment Decisions: A Manifesto
For Change. Hoboken: Wiley.