Methods to prevent stock market risks: First, avoid market risks, including three methods: grasping stock trends, matching cyclical stocks, and choosing buying and selling timing; second, diversifying systemic risks, including diversifying investment capital units, industry selection, time and seasons. The third is to prevent business risks, and the investment object should be analyzed before buying stocks ; the fourth is to avoid interest rate risks, and when interest rates are high, do not buy stocks of companies that borrow a lot;
How to prevent stock market risks
- Avoid market risk 　
Market risk arises from various factors and requires a comprehensive use of avoidance methods.
One is to grasp the trend. Carry out detailed analysis of the historical data of each stock price change, from which to understand the law of its cyclical changes, and to understand the continuous growth ability of income. For example, in the car manufacturing industry, when the social economy is relatively prosperous, the company’s profits are guaranteed, and the consumers of cars will be greatly reduced, so it is generally not easy to buy its stocks during this period.
The second is to match cyclical stocks. Some companies are limited by their own operations, and there is always a period of time in a year to stop production and production, and most of their stock prices will fall during this period. In order to avoid losses caused by the fall in stock prices, they can strategically buy other companies at a low price. The stocks that start and stop work are combined to make up for the losses caused by the possible decline in stock prices.
The third is to choose the timing of buying and selling. Based on the historical data of stock price changes, calculate the standard error, and use this as a general criterion for buying and selling timing. When the stock price is lower than the lower limit of the standard error, you can buy stocks. When the stock price is higher than the upper limit of the standard error, it is best to buy stocks. Sell ​​your stock. Fourth, pay attention to the investment period. The operating conditions of enterprises are often cyclical. When the economic climate is good, the stock market trading is active; when the economic climate is bad, the stock market trading will inevitably wither. Be careful not to use the off-season of the stock market as a period for investing in large stocks .
- Disperse system risk
One way is to “diversify investment capital units”. In the late 1960s, some researchers found that the overall investment risk would be greatly reduced if funds were spread evenly among several or even many arbitrarily selected stocks.
The second approach is to “decentralize industry choices.” Securities investment, especially stock investment, should not only diversify investment in different companies, but also these different companies should not be in the same industry or adjacent industries. The environment will have the same impact on companies in the same industry and in adjacent industries. If the investment is made in different companies in the same industry or adjacent industries, the purpose of risk diversification will not be achieved. Only companies in different industries and irrelevant companies are likely to lose the other’s profits, so as to effectively diversify risks.
The third method is “time dispersion”. Short-term investors should buy the stock in bulk before the dividend date, and then change hands after receiving dividends and other benefits; long-term investors should not buy the stock during this period. Therefore, securities investors should diversify their investment time according to different investment purposes, so as to diversify risks in different stages.
The fourth method is “seasonal dispersion”. The price of stocks will vary greatly in the off-peak season of the stock market. Since the stock price will fall in the off-season of the stock market, it will cause additional losses for the stock sellers; similarly, if you buy a stock rashly at one time in the alternating period between the peak season and the off-season of the stock market, because the stock market price will turn from high to low, it will also cause buyers to lose money. cost loss. Therefore, under the circumstance that it is impossible to predict the degree of stock market boom, the investment or investment recovery time should be extended, and there is no rush to inject capital into the stock market or withdraw funds, and use several months or more to complete this purchase or investment. Sell ​​the plan to reduce the level of risk.
- Prevent business risks
Before buying stocks , it is necessary to carefully analyze the financial reports of the investment object, that is, a certain enterprise or company, and study its current operating conditions, its position in the competition and its past profit trends. If companies with sustainable revenue growth and feasible development plans can be regarded as stock investment targets, and companies or companies with poor operating conditions can be kept at a certain investment distance, operational risks can be better prevented. If you can deeply analyze the operating materials of the enterprise or company, you will not be moved by superficial phenomena, see its flaws and hidden dangers, and make a calm judgment, you can completely avoid business risks.
- Avoid interest rate risk
Try to understand the proportion of the company’s own components in the working capital. When the interest rate rises, it will cause greater difficulties for companies or companies that borrow more, which will affect the stock price . More companies are less affected by the company. Therefore, when the interest rate tends to be high, it is generally necessary to buy less or not to buy the stocks of companies with more borrowings. When the fluctuation of interest rates is elusive, the stocks of companies with more self-owned funds should be preferentially purchased, so that the interest rate risk can be basically avoided.
- Avoid purchasing power risk
During the inflation period, you should pay attention to the commodities with high price increases in the market, and select the enterprises with high profit level and ability from the enterprises producing such commodities. When the inflation rate is abnormally high, value preservation should be the primary factor. If you can buy stocks of value-preserving products (such as gold mining companies, gold and silverware manufacturing companies, etc.), you can avoid the purchasing power risk brought by inflation.