So, you can’t go very long these days without coming across some news on the performance of the local stock market. The Jamaica Stock Exchange (JSE) has been making international headlines for its impressive performance. In January, Bloomberg, the famed business publication ran a story that outlined the JSE’s standout showing. Among other things, the story noted that in 2018 the nation’s main index rose 29 percent in US dollar terms, the most among 94 national benchmarks tracked by Bloomberg. The publication noted that Jamaican stocks have surged almost 300 percent, more than quadrupling the next-best-performing national benchmark and septupling the United States’ S&P 500’s advance. All this talk of booming stock performance has got a lot of people thinking about getting in on the action. But not everyone knows how. Well, VMG has got your back. We believe strongly in financial inclusion and in providing financial education because we care. We reached out to Akanke Scott, Equity Trader at VM Wealth. Akanke has all the info you need, so we put some questions to her. Check them out below. And, when you’re ready, give the expert team at VM Wealth a call at tel: 1-876-960-5000 – 3; or via email at wealthinfo@vmfinancialgroup.myvmgroup.com to get your journey started.
Q: There has been lots of excitement about the Jamaica Stock Exchange recently. What’s been happening?
A: The Jamaica Stock Exchange was recently given the title of the World’s Best performing stock exchange for 2018 by renowned research giant Bloomberg. The Exchange outperformed 93 other benchmarks which they track. The exchange has also had several companies coming to market and there are reportedly more in the pipeline. Even government is seeking to divest utilising the exchange. The companies already listed on the market are growing with aggressive acquisitions and expansions even into overseas territories. There are new brokers being added. The Stock Exchange is doing a lot in terms of marketing and increasing public awareness around investing. The Stock Exchange recently signed a 7-year agreement with Nasdaq which will see the Stock receiving technology that will allow them to deliver improved product and service. It will allow them to expand their product offerings. Not only this but the JSE is also receiving a new trading platform which is to be implemented by the end of the year. The Main Market of the Jamaica Stock Exchange is only up 0.72% YTD and compared to 1.19% this time last year. There are a lot of companies which may be overvalued at this time and so trading has been somewhat sluggish.
Q: Is now a good time to enter the market or should I wait until things settle down?
A: Now is certainly a good time to get into the market; there is a lot of positive sentiment about the economy and companies are coming to market. The IPO season is particularly a good time because most investors are seeking liquidity to buy into the IPO so prices tend to realise a falloff. The prices should see a rally once the hype dies down.
Q: What should I consider when choosing stocks to purchase?
A: There are several things to consider when purchasing stocks, these are just a few:
Do you want regular income (dividend paying stocks would be the choice then); are you in for the long-term or short-term, the P/E of the company (how much you are paying for a dollar of earnings), the profit margins, the growth prospects of the company, the management, how viable is the company given the economic conditions and competition, etc.
Q: How do I know when it’s time to sell stocks?
A: Well selling stocks also has a lot of considerations as well. Once you are buying into a stock and it’s not for the long term you may want to determine an exit point. That way once the stock reaches that price you exit and don’t get greedy.
Q: Roughly what percentage of my total investment portfolio should be held in stocks?
A: It all depends on you, the investor. Stocks are one of the high-risk investment types however they also have high potential return compared to other investments if you make the right moves. Usually stocks are recommended for the younger investor, however that no longer holds. Anyone can invest in stocks but there has to be consideration for how much they can afford to risk.
