Decision-Making in the Investments in Stocks Essay

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Decision-making in the investment area of every business is one of the most important skills that managers should obtain to make sure that there is no risk for further development. Rash decisions can lead an organization to financial problems and bankruptcy (Ali et al., 2020). Investments in foreign stocks might also differ from the internal market. All potential benefits and drawbacks should go through deep analyses to understand how the international stock market generates outside the US.

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Investors usually communicate with each other, and they are all trying to follow modern trends and changes in the business environment. When interest rates fall, investors are actively investing to generate more profit in the future when the rate of interest achieves its peak. One of the benefits of investing while interests are low is the insurance in the future earnings of a business. However, without knowledge of the investing system, companies might be at risk of money loss (Lian et al., 2019). For instance, inflation might become one of the determinants of beneficial investing as the value of money will be lost, and the company will generate less in the future.

Learning from other investors might be useful, as professionals who have been working in this industry for many years can easily understand when and where money can be invested to generate the most profit. When interest rates are falling, and several managers from different companies use this occasion as a beneficial time to invest, it can be rational to use this time to integrate with the stock market. However, it is still important to avoid potential risks and conduct a deep analysis before purchasing shares from other organizations.

To stay professional in this market, investing managers should create specific plans with points that should be strictly followed. Beta performance should stay as one of the main priorities, which indicates the willingness to invest. A low beta says that there is less risk of losing money and fewer earnings, while a high beta presents investors with higher risk and increased returns (Silvasti et al., 2020). While deciding the process of investing in a specific business, managers should not break their plan and alternate the type of investment. These quick changes might cause higher risk without serious observations. For those, who are paying extra attention to beta performance, it might become to decide whether a high or low percentage will be beneficial and profitable. For beginners in the investing sphere, it is extremely important to follow a created plan and not make quick decisions when the surrounding tends to change their buying habits.

Investments and their returns might have both positive outcomes and risks which cannot be avoided. Managers of the investment department cannot always predict the possible conclusions of buying shares from different organizations inside the US, and their monthly performance might vary depending on their work. Some owners of companies are paying their managers quarterly depending on the general return, and they can also receive bonuses for a high percentage of earnings.

However, for several businesses, this way of wage payment can be costly as during the first month of the quarter, the return level is high, but in the next thirty days, the performance shows a negative outcome of the investment when the organization goes into negative territory on average income (Hernandez and Al Janabi, 2019). Consequently, a new method of measuring the work of the investment manager introduced should be introduced. For example, investors can make a weekly report about their work and present investment plans that might work for the future generation of profit. This strategy will increase the manager’s portfolio and create a reliable relationship with the owner of the organization. Moreover, top managers will be able to measure the performance of their workers every week and easily estimate the possible distribution of salary.

Every country has different techniques for controlling the stock market, and measuring the investment manager’s portfolio can differ from the USA’s way of completing the same action. For instance, in European countries, managers of companies that buy shares and invest in other organizations are paying more attention to the beta performance (Ordu-Akkaya and Soytas, 2020). The strategies for rewarding workers are almost the same across the world. However, managers in Europe are paying more attention to small details and general revenue shifts, which directly affect the investor’s salary, experience, and professionalism. Managing measurement of the portfolio in developed European countries should be deeper, and owners should keep the process of buying shares under their personal control.

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In conclusion, investments play a significant role in every huge organization striving to achieve high profit and success in the future. Without controlling spending and returns, organizations might fail, and it may be complicated to rebuild the previous reputation and achieve a high level of performance. To make sure that the investment sphere of an organization is under control, the owner should monitor the managers from this department and require constant reports to predict future changes and decrease the risk, which can appeal.

References

Ali, S., Bouri, E. & Czudaj, R. L. (2020). Resource Policy, 66.

Hernandez, J. A. & Al Janabi, M. A. M. (2019). Journal of Forecasting, 39(3). 512-532.

Lian, C., Ma, Y. & Wang, C. (2019). . The Review of Financial Studies, 32(6), 2107-2148.

Ordu-Akkaya, B. M. & Soytas, U. (2020). Resource Policy, 65.

Silvasti, V., Grobys, K. & Aijo, J. (2020). Applied Economics, 53(16). 1826-1839.

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IvyPanda. 2023. "Decision-Making in the Investments in Stocks." February 7, 2023. https://ivypanda.com/essays/decision-making-in-the-investments-in-stocks/.

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IvyPanda. "Decision-Making in the Investments in Stocks." February 7, 2023. https://ivypanda.com/essays/decision-making-in-the-investments-in-stocks/.

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