Most stocks are traded on exchanges, which are places where buyers and sellers meet and decide on a price. Some exchanges are physical locations where transactions are carried out on a trading floor. You’ve probably seen pictures of a trading floor, in which traders are wildly throwing their arms up, waving, yelling, and signaling to each other. The other type of exchange is virtual, composed of a network of computers where trades are made electronically.
The purpose of a stock market is to facilitate the exchange of securities between buyers and sellers, reducing the risks of investing.
The Jamaica Stock Exchange
The Jamaica Stock Exchange was incorporated in 1968 and commenced operation in 1969. The Jamaica Stock Exchange (JSE) is the Caribbean’s leading exchange. In 2018 Bloomberg recognised JSE as the stock market with the biggest growth over the last five years. MVL Stockbrokers Ltd is one of the longest established stockbrokers on the JSE, having been a member for three decades.
- Invest in approximately 20 to 30 stocks in at least six to eight sectors with different investment characteristics.
- No more than 20% of the total value of your stock portfolio should be in any one sector.
- No more than 10% of the total value of your stock portfolio should be in any one stock.
- You should invest a minimum of approximately 3% to 4% of the total value of your stock portfolio in each stock.
Deciding which stocks to invest in can be difficult, especially if you have a low tolerance for risk. That’s why it’s important to define one’s financial goals and how much risk can be tolerated. Research stocks that fit within your strategy and invest in stocks that have the potential to help you meet your specific goals, whether you want investment growth, income, or a combination of the two.
Your Financial Advisor can provide you with a wide range of stock investing services, including:
- Asset allocation strategy development
- Individual stock selection
- Help in deciding when to buy and sell your stocks