I took an educational trip to the Jamaica Stock Exchange last week. I have always been interested in learning more about stock trading because all those who I have asked have only recommended it highly and as a purely money making venture. Better yet, the most memorable comment I heard was "trading stocks ensures I can buy Wendy's". Which for me translated into if this can afford me the luxury of a $1000 burger then it's surely a great investment. After my trip I am not so sure about how lucrative the stock exchange really is for the common man on a tight budget. However I do see the extent to which it pays off for those who have a few thousand to risk in the stock's poker-like game of chance. Or for those willing to even consider the purchase of a $1000 burger.It turns out the Jamaica Stock Exchange has regular tutorial sessions geared towards educating persons on stock trading and an entire team of marketing personnel dedicated to this task. My visit brought me to a Ms. Charlette Nugent, a polite woman who for all her efforts was able to get me to understand a few simple ideas behind the active trading of stocks.
Nugent Tip 1:
Trading is most easily and efficiently done through a certified broker/brokerage company. There are several in Jamaica, from Barita Investments to Mayberry. The alternative is trading directly between persons. This method however presents several additional costs that make a brokerage more attractive to persons on pricing alone. Costs like lawyers for the legal transfer of property and the tax associated with the transaction.
Nugent Tip 2:
Trading stocks is like bartering at a market downtown for produce you aim to resell. Your goal then is to get stocks as low as possible so they can be sold for as high as possible.
Nugent Tip 3:
Stocks are easily affected by fiscal decisions of an economy. Every profit made is taxed and commission for your broker is subtracted. It is important that this is understood by any interested party before they consider risking their money.
Nugent Tip 4:
Profits are generated by returns on shares (shares being the unit of measurement for this method of trade). There are two main types of shares: ordinary and preference shares. Ordinary shares are open to the masses and associated with the benefits of a dividend payment but said payment is based on the overall success of the company. Preference shares are more restricted, gifted to only a few persons. Dividend payments also apply but they are more stable. In the sense that these payments are not entirely based on company successes but on a fixed return figure.
Separate and apart from Ms. Nugent's quick tips she was able to disclose information on the role of the Stock Exchange in the lives of small enterprises or businesses. The Stock Exchange has a market specifically geared towards smaller companies, called the Junior Market. All it takes is the willingness to approach the Stock Exchange for capital and an examination by the brokerage's board to determine the value of the company. After which small companies can enjoy incentives that range from five year tax cuts to half off ten year tax packages.
That is basically what I was able to understand. I am sure that there are some areas that are not as eloquently expressed as they could have been but I am no stock expert. For those interested parties Ms. Nugent advised me that the Stock Exchange gives free advice and welcomes persons to take the tutorial and learn all they can.
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