What is an action?

I'll leave two action definitions:

From an investor 's point of view: a share is a title to the ownership of a company, granting the investor rights over the company. Therefore, the investor has the right to vote , gain the right to participate in the profits , and can literally be called the owner of the company.

In addition to being invited to shareholder parties, belonging to a group of people who have one common goal: to make the company work.

From a speculator 's point of view: an action is a paper that must be bought and sold in a short period of time, seeking maximum gain . Therefore, he is not thinking about the partner meetings, the financial health of the company, and often he doesn't even know the name of the company, just knowing the ticker (code) that the company is traded on the stock exchange.

What is an action for?

Both the investor and the speculator seek to realize some kind of financial gain . While the speculator seeks only capital gain, the investor seeks not only capital gain, but mainly the cash flow that shares can provide.

Therefore, a stock when well selected can and should provide the investor with a great source of income.

Image 1: Example of investment from the investor's point of view. Taesa Company (TAE3).

As we can see, a stock has two sources of value : the first is the capital gain represented by the difference between the green arrow and the red arrow. For there to be a capital gain, we must have sold no matter how much we have bought. The second source of value , and my favorite, is the income represented by the blue arrows. This amount is called a dividend , and represents an ideal fraction referring to the shareholder's participation in the distribution of profits, which is deposited in his account on dates agreed upon at the shareholders' meetings .

Is it worth investing in stocks?

The answer is: it depends. Investing in stocks is not for everyone, as a set of qualities is required of investors and without which it is practically impossible to obtain satisfactory results in this market. The most important quality is undoubtedly the investor's emotions , how he reacts in times of panic and euphoria . To verify that actions are made for you, try answering the following question:

What would you do if the stock drops 20% right after you buy? And 30%?

Image 2 - Prices of common shares of the company Taesa over the years 2019-2022.

In March 2020 we had a drop in the order of 20% in a matter of days and many investors who ′′ left ′′ suffered irreversible losses .

Bear in mind that 30% fluctuations in the price of a stock are normal over the course of a year, and if you are not prepared for this effect on your portfolio, I advise you to think twice.

Why do people lose money on stocks?

Obviously, there are many reasons that lead to losses, but from the point of view of the common investor , to whom I write, this would be the main mechanism behind the losses:

Many families have excess capital , that is, they produce more than they are able to spend, and therefore, they are led to build up their reserves . However, their daily activities do not allow them to undertake something new with the newly acquired capital, which would take even more of their time, which is already scarce, and therefore they are forced to make investments . A good part of the investments is made in real estate, as families consider them a safer and, let's say, tangible investment. However, as a family cannot have all of its capital invested , it is necessary to have some cash reserves . It is at these times that they seek to allocate part of their cash to carelessly selected stocks .

As a result, there is a high probability that this family will suffer losses and start to “curse” any and all investments in stocks .

to reflect

• How not to lose money on stocks?
• Can an investment in stocks be less risky than real estate?