The investment in Stock Exchange and his profitability

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25-10-2008 | Javier Gomez

In crisis since the current ones we all raise in some moment the profitable thing that is or can allow being the Stock Exchange. After meetings as those of this week or falls as those of yesterday of more than 5 % in the general index, the fear and the suspicion outcrops and the money goes out to baskets of the markets. And since it usually happens, the panic is the one that acts in most of the investors (or rather, the small investors) that allow to take for the phrases that feed a recession that is still to come.

The things are not well, that is clear, but they are not also so trágiocas as so that they live through meetings of authentic panic in which everything sells. It is not logical that Santander falls down 15 % in only one day, or that now it is located to half of price of what was a few months ago. They all forget the fundamental ones and the only thing that loves it is to safeguard the furniture as if ésto was the end of the world.

It does some time I remember that I read a report that he was speaking about the profitability of the Stock Exchange, and in the one that had been studied year by year, the advances and regressions of the markets in all his history. The result was coming to be that as more years the most profitable investment was supported it was proving, and that in spite of the business cycles that always exist in any Stock Exchange, in the long term, always it usually win. In that report I believe that it was established that according to historical information 7 years it was the term to guarantee with entire safety that gains itself money in Stock Exchange.

But skylight, I do a few nuances. Yes, quite very nice, like so many and so many comments that there make many gurus who only appear when everything is fine, but it is necessary to bear in mind that it is not the same to enter when the Stock Exchange is in maxima to do it in minimums. And if not, that say it to those who bought actions of the Santander to 14 € now when they are to 7. There is a saying in Stock Exchange and the fact is that “it is bought when the low Stock Exchange, and it sells when it rises”. Completely in agreement.

Is it now the moment to buy? It can that yes, but always bearing in mind three things:

- First of all that the investment that we do now will be long-term. To get into Stock Exchange to try to win of one day for other, at the moment, is necessary to forget it because we will take all the ballot paper of going out clipped. To say how it has been said so richly, “Santander has collapsed 15 % and is at laugh prices“ and to incite to buy is a foolhardiness if earlier the things are not tinted. Really, Santander to 7€ is to very well of price … long-term, because for fundamental this price is 5 times his benefit. But the most probable thing is that we see it for below even of 7 if there are confirmed the reductions of benefits of the companies; if the recession is confirmed and that Spain can be one of most harmed; and, especially, if by hand of the demon, the crisis of Argentina and his fears, Brazil and Mexico are penetrated. In the latter case yes that we will see the strongest falls if everything does extensively South America to itself. And that without counting the demands that him are falling down to Santander of the hand of his branch Banif and that we should hope that they should not prosper for the good of his quotation. Also, the big fortunes are buying in these values at derisory prices, of that it me is not doubt, but they have the advantage of which if it goes down more they will buy more to have the average price lower, knowing that in a few years they will recover it, but we, investing poor, with our home economics we cannot realize several buys. If we are ready to assume that the prices probably will go down more and that at first we will have some losses, then forward, yes, because there can be good buys right now if we think in several years sight.

- Secondly, that we buy values with the irreproachable fundamental some. It is true that right now those fundamental do not look, but as soon as the panic stages happen, the first money will be fixed in the solid values; in the healthy companies and without problems, and these will be those who benefit from the first increases.

- In the third place, let's do us to go for the voices of those who try to sell his image by means of buy ésto, or it sells aquéllo, and there comes to my mind the image of an analyst of a very well-known agent, that it went out does very little in television saying that “we are already alert a year ago of this crisis”. Yes, but insurance that they did not advise to his clients to sell, and well that were saying that Santander to 10 € was a bargain … When we hear recommendations it is necessary to read and understand why that says. With reasonings better bases will be had to choose where to invest and to trust that we invest well.

… and the fact is that to past bull, it is always easy to speak.

Investing in stock is profitable, although it it does not seem, but with many head, and especially, with precaution, because what they remind to us is these crises that it is not a game and that the Stock Exchanges not always rise. In order account, ésto is an Economy, and as well it is known, business cycles there is and there will always be, and of all they leave.

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