Equities
Owning a share of a Company
Owning equities involves buying outright equity shares in a stock and having a share in ownership of a company. Typically as a share owner, you have voting rights in a company that can be exercised in corporate decisions. Shareholders may also be eligible for dividend payments.
The strategy of buying and holding equity shares is most used by longer term investors. Timing of buying shares in a share portfolio should be when stocks are trading at low levels often following a downturn, a correction, or at the bottom of a bear market. Profits are realised when shares have grown in value and can be sold at then end of a bull run. If you are uncomfortable with the leveraging power or risk afforded by many trading strategies, then the simplest of all strategies can be to purchase stocks or shares outright and hold for the longer term. Many unsophisticated and sophisticated investors alike hold equity shares as part of their investment portfolio.
Shares can be purchased through a full-service broker, a discount broker, through the company directly or from an online account.
Trading Derivatives
Those wishing for faster growth often opt to trade stock derivatives. A stock derivative is any financial instrument which has a value that is dependent on the price of the underlying stock. Options, futures, CFDs and eminis are the main types of derivatives on stocks. These do not require you to own the equity shares outright, but trade against the potential price increases and decreases, with some degree of leverage.
Portfolio Margining
Some investors use a combination of both strategies mentioned above and run a Portfolio Margining account, where owned equity stocks or shares are used as the margin component for other traded instruments such as eminis, options, CFDs, forex or futures.
Bluechip Equity Stocks
It is safest to invest with companies that are well-established, with a strong balance sheet of stable earnings and limited liabilities. Such blue chip companies have the highest value and give regular, reliable dividends, even in a poor economic climate.
Dow Jones Industrial Average (DJIA)
The DJIA is made up of 30 of the USA strongest bluechip companies. Companies in the top 30 change from time to time and are from a range of industries. Any decision to add or remove companies from the Dow 30 is made by editors of the Wall Street Journal. Here are some that have made the cut:
3m Co
Alcoa Inc
Altria Group Inc
American Express Company
American International Group, Inc.
AT&T Inc.
Boeing Co.
Caterpillar Inc.
Citigroup, Inc.
E.I. du Pont de Nemours and Company
Exxon Mobil Corp
General Electric Company
General Motors Corporation
Hewlett-Packard Co.
Honeywell Intl Inc.
Intel Corp.
International Business Machines
Johnson & Johnson
JP Morgan & Chase & Co
McDonald’s Corp.
Merck & Co., Inc.
Microsoft Corp.
Pfizer Inc.
The Coca-Cola Company
The Home Depot, Inc
The Procter & Gamble Company
United Technologies Corp.
Verizon Communications
Wal-Mart Stores, Inc.
Walt Disney Company
