In a scene like the present one, of excessive volatileness and highly sensible financial markets to strong movements motivated by political decisions and flows of the news, the main message that is due to transmit is of being cautious.

From the financial point of view, we differentiated four stages in which we denominated service life of an investor. First it includes/understands since the studies are finalized and begins the professional life; second it is where the necessity of house and consumer goods is greater, therefore, where the phase of indebtedness takes place; third when the children emancipate themselves and they are cancelled the credits; and, finally, fourth it is the period of retirement.

Logically, in each one of the different cycles the necessity from products and financial assets is varying. Centering us in the world of stock-market and the financial assets that negotiate in her, the maximum demand usually concentrates in two first stage of the service life. On the other hand, the product typology demanded in the last stages usually goes more directed to assets with a clear profile of security, and bound to the classic concept of the deposit to fixed type.

The risk level directly is related to the phase of the service life, reason why in the first stages the investor will assume more risk level, since the capacity of recovery in case of losses is major that in the two last ones, which we can define as phases of maturity.

We are going to concentrate, therefore, in these two last stages, in which the profile of average risk is average low, due to the reduction of the income as a result of the retirement. Also, the capacity of recovery of possible losses is smaller by a simple question of time.

The major key to invest in stock market, being this one common one for all the phases, is to invest the saving surplus that we are not going to need in two years like minimum, since the present stock markets are subject at great levels of volatileness, that is to say, great intradaily oscillations of levels of prices.

Due to this, he is advisable to invest to means or length term, to avoid frights. In the present scene, it does not turn out strange to see how the valuation of the actions, independent of if they are catalogued like insurances or blue Chips, falls or diminishes at levels nonseen from the time of them “point com�.

However, with this we are not suggesting is reversed and we simply forget our portfolio until pasts six or twelve months, but that we are preparations to that our positions can lose a 10 percent in two weeks or, on the contrary, gain that it in two days. That if, is recommendable to undo the positions in case our portfolio revalues a 10 percent in two days, since probably the following correction is going to be superior.

Another one of the fundamental keys is to invest in solid values, with potential of growth and compensated balance. In this way, we will have the guarantee of which we are going to invest in companies with a decisive weight within the necessary economy of a country and for the own development of the same. Perhaps we are mistaken at the time of purchase in relation to the price, but we thought that the company that we bought bond more, is simply a time question.

Another one of the priority factors is to invest in values in which the expectations of yield via dividends are attractive. This form, we can be assured between a 3 and 5 percent of yield, independent of the behavior of the action in the market. The yield via dividend is one of most interesting in the Spanish market, because the 1,500 first Euros are exentos of fiscal taxation.

Also, it is important to know macroeconomic the character data published, because they directly affect on all the stock-exchange places world-wide level. A good data of creation of use in the United States means that the economic activity is recovering. This data the stock markets are going it to interpret like the good news, which means that after their publication all the markets will raise. That yes, this does not guarantee to us that the session closes in positive, since the high volatileness intraday is too strong like making prognoses.

It also turns out interesting to see how little important countries in the international scene, are in the front sight worldwide. It is the case of countries like Portugal, Greece or Spain. Any excellent news on its financial statement repels directly on other world-wide places or the quote of the own Euro.

But this scene is not the habitual one. The normal thing is that the movements of places as New York or London has a direct repercussion on the rest. For this reason, it is very significant to see how in the case of Ibex 35 Spanish, when Dow Jones American abre - on the 15,30 hours, following the schedule of summer or winter, directly affects the tendency of the market, doing to raise or to lower our selective one.

One of the most important keys that it is had to follow of way ordinate and continuous form, is to have a method knowing how much it has get ready to win and to lose at the time of realizing a stock-exchange investment. In this sense, the concepts of “stop acquire special interest loss� and “stop profit�. For it, it is necessary to mark a limit in the losses and the gains thus to avoid future potentials losses.

If my objective is to obtain a 10 percent of yield in a stock-exchange investment, is advisable to sell my positions once obtained. In case of not doing it, by a question to want to obtain more, probably we will sell below the wished yield, assuming losses on which we did not even count.

For this reason, to be disciplined and to follow a method in gains as much (“stop profit�), like when we are in losses (“stop loss�) is fundamental. Although sometimes it is very difficult to assume losses and, for that reason, in the majority of the occasions we are attemped to buy more so that our price of balance or “break-even� falls. This practice not always is advisable.

Really, the best keys to invest in stock market are to be faithful to the method that we marked ourselves at the beginning of realizing the investment, being arranged to lose in a while certain to avoid losses majors; and to invest the saving surplus that we are not going to use to means or length term.

Where to invest? The long term investments and in strong companies with high potential of growth and a good dividend are going to have majors problems of being profitable. On the other hand, he is advisable to flee from the strong speculative movements and the popular “jack mackerel�. Of this form, we will avoid great scares and, mainly, great losses in our portfolios.

Finally, he is interesting to emphasize that many products in the stock markets exist, not only the actions. For example, they are the ETF (quoted bottoms), that talk back to the indices of form similar to the investment funds with smaller costs of intermediation; and “warrants�, with which it is possible to be won when the indices, actions or currencies of reference lower. These two products are very interesting, but of a level of complexity superior to the action markets, reason why it would be needed to deepen a little more.

He is not either recommendable to invest without knowing the product, although luckily this no longer is possible thanks to the Law Mifid, that protects the retail investor (the companies which they render services of investment are forced to adapt the information and its supplies to the profile of each investor).

Alvaro Laorden

Professor of the Financial Area of IDE-CESEM

He directs the societies of Values of Barclays in Spain and Portugal