Can you buy stocks?

Stocks represent a share of a company.

Common stocks are among the most well-known and widely traded financial instruments globally. Purchasing a share grants you fractional ownership in the issuing company, allowing you to participate in its potential success. This ownership comes with the opportunity to benefit from distributed profits in the form of dividends (if declared) and capital appreciation as the stock price rises over time.

However, common stocks are also one of the most volatile asset classes, with prices influenced by factors such as company performance, industry trends, interest rates, and broader macroeconomic conditions. Because of this, investing in stocks is generally recommended for:

• Investors with a reasonable tolerance for volatility and risk. Stocks can experience significant price swings, and navigating these fluctuations requires emotional discipline and a long-term perspective.

• Investors with a long investment horizon (ideally 5 years or more). Time smooths out market volatility and increases the probability of positive returns, especially when reinvesting dividends and harnessing the power of compound interest.

• Investors with a solid understanding of financial markets. Successful stock investing involves analyzing company fundamentals, industry dynamics, and macroeconomic indicators to make informed decisions.

Common stocks are NOT suitable for:

• Investors seeking guaranteed income. Dividends are not mandatory, and companies may reduce or eliminate payouts during periods of financial instability.

• Investors with a very short-term horizon. Short-term stock movements can be unpredictable, and selling during downturns may result in significant losses.

• Risk-averse investors or those investing capital they cannot afford to lose. Market corrections and bear markets are natural occurrences, and investors who panic-sell during declines may lock in losses rather than benefit from future recoveries.

Key Considerations for Long-Term Stock Investors:

1. Compound Growth Potential: Reinvesting dividends and holding stocks through market cycles can exponentially grow wealth over decades.

2. Market Cycles and Resilience: Markets are cyclical, with phases of expansion, contraction, and recovery. Understanding these patterns helps investors stay grounded during downturns.

3. The Power of Diversification: Holding a diversified stock portfolio — across sectors, geographies, and market caps — reduces unsystematic risk and stabilizes returns.

4. Macroeconomic Awareness: Factors like inflation, interest rates, geopolitical events, and fiscal policies impact stock prices. A knowledgeable investor stays informed to adapt their strategy accordingly.

5. Behavioral Discipline: Cognitive biases (like loss aversion or herd mentality) can lead to irrational decisions. Developing a rules-based approach to buying, holding, and selling stocks helps mitigate emotional pitfalls.