When we start in the world of investment, many doubts arise, especially when we are completely unrelated to the stock market. Opinions abound and It's difficult to unite concepts, the terms seem to be made only for professionals in the sector. And in a certain way It's, but in the following lines I want to land many concepts that circulate around investing in the stock market, so that anyone can understand and put into practice the knowledge of great investors. In other words, something that I would have liked to find when I started in this many years ago.

The stock market is interesting because, somehow, we know it exists, but we don't dare to enter or make use of it, because we have been told since we were kids that It's a casino, practically like going to betting, where you roll dice or bet on a color, may even be better. And in a certain way It's, if we don't know what we are doing, as in any subject that we don't prepare for. The truth is that the stock market is one of the few places that "with your feet on the ground" you can achieve superior results over any other activity in a comfortable way. Attention, I say comfortable but not easy, because if the stock market were easy, there were no people doing basic work on the street. Learning and some fundamental concepts are required that we must know if we want to enter this interesting world.

The first thing to understand is the difference between investing and speculating. Many people think they are investing, when in reality what they are doing is speculating. Investing consists of having total conviction in an idea, especially when the market says otherwise, knowing the business very well, its competitive advantages, why it will do better than the competition, and estimating its future growth. On the other hand, speculating is based on the expectation of price changes, generally in the short term, without paying much attention to the fundamentals of the business, but paying special attention to the price. The drawback of speculation arises when everything goes wrong, and investors begin to leave en masse, the idea is not supported on a solid basis, causing massive exits and the consequent fall of the stock price.

Another important concept to take into account is the existence of two investment styles, commonly used in the financial community, and where there is usually no consensus between them, I'm talking about fundamental analysis and technical analysis, two ways of guiding investment depending on what each investor is looking for. Referring to what was said above, in the fundamental analysis the business and sales evolution, future data and margins are important, it analyzes business accounts, cash flow, balance sheet, income statement, and an important point is that it applies to any field of investment, both in real estate investment and in conducting a business. On the other hand, technical analysis is based on past data, no matter the business, It's based on charts, based on psychology, it only exists in the stock market, and most importantly, there are no successful investors who have only used this technique. . All the analyzes that we will see below will be based on "fundamental analysis", which is the strategy that the value investment follows to value companies and determine the intrinsic value.

Something that also causes a lot of confusion at first is the share price, It's high, It's low, It's cheap, It's expensive. The truth is that the price of a share doesn't say much about whether the business is expensive or cheap, a $1000 share may be cheaper than a $100 share, this is due to the number of outstanding shares and the quality of the business. What tells us if we are buying a company expensive or cheap is the valuation. But we'll talk about this later, the important thing is to gradually assimilate the concepts and feel comfortable with this fascinating world.

In the following lines I want to remove the fear of potential small investors about the stock market, and explain in an easy and close way, why it is important to invest, where to set your sights, when to hit, not any time is good to enter in the stock market, the most frequently used terms, and some investment ideas that can help you understand the work of an analyst.

To continue….