Tip 1
Build your portfolio step by step: Remember that it's always better to gradually invest so as to avoid buying when prices are high.
Tip 2
Try to invest when a company announces news that are not significantly negative, or when the share price is relatively close to its 52 week-low figure.
Tip 3
Try to realize profit gains when the company announces good news.
Tip 4
Maintain a well-diversified portfolio so as to minimize risk. At the same time, do not over-diversify for this will reduce your level of knowledge about the stocks you are holding. Diversification should be made according to activity, geographic location and/or according to a sector or niche. A well-diversified portfolio is easier to manage and is also less sensitive to price fluctuations and economic changes. For a more diversified portfolio, you could add to your portfolio what is known as "cyclical investments," which involves companies whose performance depends on recurring economic cycles. To increase the geographical diversification of your portfolio, there are specialized funds that invest in foreign as well as domestic markets. (NOTE: real time information about the all markets in the in the Middle East is available on Albawaba.com.)
Tip 5
Higher risk provides the promise of greater returns, but also more severe losses. So how do you estimate risk?
| Category | Company Classification | Advantages | Disadvantages |
| Safe investments | Companies trading in sectors with moderate price fluctuations, and where growth rates are modest. | Limited risk. Stock prices are less volatile during poor market performances. | Moderate returns in the long-run. |
| Investments with relatively constant returns | Companies with low growth rates (e.g. real estate sector). | Relatively low risk. | Share performance is usually weak—below 6 percent. |
| High-growth investments | Companies trading in high-growth sectors (e.g. telecom, computers, Internet). | Profits could be high during moderate market performance. | This is a risk of sharp drops in price (euphemistically referred to as market corrections). |
| Cyclical investments | Companies where performance depends on economic cycles (e.g.: construction, automobiles, raw materials). | High returns are possible in a short period of time. | Higher risk in the short-run. Because share price is sensitive to economic trends, low returns in the long-run. |
| Speculative Investments | Companies that can be taken-over, are in a state of recovery, or undergoing significant changes. | Possible to attain high returns in the short-run. | Highly volatile, and thus highly risky.. |
Tip 6
Remember to keep a high level of liquidity for better risk control and easier management. It allows you to take advantage of market opportunities.
Tip 7
Do not hesitate to sell when profits have strongly risen.
Tip 8
Do not hesitate to sell even with a slight loss if the company has poor future perspectives. It is better to sell than to keep the stock thinking that it will rise again.
Tip 9
It is safer to sell when either the company or the entire market is in a period of uncertainty.
Tip 10
In order to maintain a successful investment with high returns, you must be fully aware of global economical and financial trends as well as performances. For that, purpose, Albawaba.com provides the most updated news on the Middle-East stock markets, and follows the performance of the most relevant and important companies in the region.
Tip 11
Do not invest more than you can afford to: In the short-run stock prices are inclined to fall sharply. You must be able to hold onto your position even during market corrections.
Tip 12
Avoid placing "market orders" on stocks that have little liquidity, so as not to pay a higher price than the trading value of the previous day’s closing figure.
© 2000 Mena Report (www.menareport.com)
