Stock Market; Professional Experiences for Non-Professionals

Warren Buffett, one of the wealthiest investors in the stock market, states that there are two simple rules for investing in the stock market. Rule one: Never lose money. Rule two: Never forget rule one. These two famous rules serve as an introduction to entering the capital market, commonly referred to as the stock market. The important question is, why the stock market? The answer is very clear: the income from your business or salary averages 30 percent in the year 1996, and experts believe that in the current situation, there is a need for five sources of income, with your job being one of them; thus, the stock market can be one of these new income sources. In the stock market, you profit based on your risk tolerance, which simply means that if someone accepts the risks of entering the illegal drug market, they know that the likelihood of earning millions in this activity is as high as the chance of arrest and punishment. The higher the risk you are willing to take, the greater your potential for profit. This same example applies to the capital market, but in its legal and transparent form. What questions must we answer to enter this market? With what money do you want to enter this market? Surplus money? Inheritance? Money from selling a house or car? It must be said plainly that selling a house and car to enter this market is unprofessional; at best, mobilizing surplus funds for this purpose is profitable. What amount of capital is needed to enter the market? How much can one earn monthly in the stock market? In what time frame should one consider the initial profit or loss? The amount of capital for purchasing is not important, and predicting monthly profitability is also difficult, but experts believe that a three-month horizon, without considering daily fluctuations, is the best option. Among the key points for entering this market is that, firstly, activity in this market is a full-time endeavor. Secondly, this activity requires information and knowledge. Thirdly, being patient and acting non-emotionally is a condition for continuity. It should be noted that information plays a crucial role in financial markets and the stock exchange. It does not matter whether you are a professional analyst or whether you seek guidance for investment from investment consulting firms, or even if you want to view the price of a stock you purchased on your own; in any case, there is always a need to gather and analyze information and knowledge for investment decision-making. Generally, analysts use raw data to analyze and assess the stocks of companies and industries and to find trading and investment opportunities. Another category includes prepared and analyzed information provided by investment consulting firms, brokerage firms, and other individuals and entities to traders and investors, which can be utilized for entering the market. What do successful and effective experiences in this market tell us? Non-professionals take less risk by purchasing shares of large companies. Those who lack financial information about listed companies prefer not to buy shares of small companies with concentrated ownership, as the potential for price manipulation of small companies is greater than that of large companies. Investors who are not informed about the market or the status of a specific company and are not financially savvy make indirect investments, meaning they purchase shares of mutual funds or invest in a portfolio of securities. Experienced investors know that they should not invest all their capital in one basket or on one stock. Borrowing to purchase shares increases the investor's risk level; therefore, risk-averse investors who lack sufficient capital should not buy shares through borrowing. Non-professionals who fear the possibility of price manipulation have had successful experiences buying shares with a free float percentage and have tested a safe boundary. Those who are troubled by severe market fluctuations and avoid them tend to favor purchasing shares that have a 'market maker,' meaning that when a stock falls, an entity prevents the excessive drop in its price, thus the investor bears less loss. If the continuous increase in the price of a company's stock is within permissible limits - for example, three percent daily - without solid economic and financial reasons, the risk of purchasing these securities will be high, as it may be due to hype, rumors, and planned actions by a group of major shareholders and investors intending to sell shares after artificial increases. Non-professionals and those with little capital have spoken of many sweet experiences after the initial public offering of each stock. During stock market recessions, purchasing participation bonds is more appealing, and during the boom of this market, using expert knowledge can create a good source of income for oneself and their household.