The economy lately has been full of uncertainty. Starting from the constant emergence of innovations each year, unexpected wars, to global disasters such as Covid-19.
These disasters certainly disrupt supply chains, consumer behavior, and people's purchasing power. Ultimately, investors are facing new challenges in the midst of this uncertain world.
Certain sectors tend to benefit when an event occurs, while others experience losses and bankruptcy. For example, when the price of energy commodities rises due to the Russia-Ukraine war, fossil fuel producers experience a sharp increase in profit and attract many investors. This is in contrast to petrochemical companies which suffer a severe blow due to the rise in Break Even Point.
However, even if we do not work for these profitable companies, we can still benefit if these companies receive God's blessings. One way is to become an investor in the Stock Exchange to buy certain stocks that are expected to bring profits in the next few months or years.
What Is Stock Exchange ?
The stock market is a place where people who own a portion of a particular company can trade it with each other. They hope to own a share of a company that will experience future profits, causing the value of their stock to increase.
The practice of offering shares of stock to the public, or an IPO (Initial Public Offering), was first done by a Dutch company hundreds of years ago. The company was the Dutch East Indies or VOC, which was in the spice trade.
At that time, the VOC sold several shares of its ownership to the public with the condition that the shareholders would receive dividends at regular intervals. Since then, stock trading has become popular and the first stock exchange in the world was built in Amsterdam, the Netherlands.
In addition to providing potential profits to the public, the stock market has a high impact on the evolution of human civilization. Through the stock market, many companies have received fresh capital to add more innovations that have a positive impact on society and the development of human civilization.
One example is Google, a company that has had a significant impact on the dissemination of information, from search engines to YouTube to Android. Google went public in 2004 and raised nearly $2 billion. Since then, Google has grown rapidly and has had a greater impact on human civilization, thanks to the fresh capital it received.
Gain From Stock Market
Investing in stocks listed on the stock exchange does offer promising long-term profits. Your money can multiply many times over if you put it in the right place, especially if you reinvest the dividends you receive.
One of the advantages of investing in the stock market is protecting our money from inflation. For example, if the average annual inflation is 5%, then your money that you keep under your mattress for 5 years will decrease in value by 25%. For example, if you have 1 billion rupiahs, then your money will be worth 750 million rupiahs in 5 years.
If you bought Google stock at the time of its IPO, your money would have increased many times over. At the time of its IPO, Google's Market Capitalization was only $23 billion, while it is now $1.3 trillion. This means that its asset have been multiplied by 56.5 times.
However, investors must be very careful when placing their money in the stock market because we do not know which companies we may miss for investment. How many people missed the opportunity to invest in Google in 2004?
Risk of Delisting
The stock market is not always good but it has losers and winners, not all stocks in the stock market will continue to experience growth every year or every month. Therefore, a very smart strategy is needed to maximize profits in the stock market.
However, if a company continues to experience poor performance, it may be removed from the stock market or delisted. This can happen because the company's revenue is decreasing or it is involved in legal cases.
Each stock exchange has its own rules, including rules regarding the requirements for a company to list its shares on the stock exchange and rules regarding the risk of your shares being delisted from the stock exchange. Therefore, you must learn about these things before entering a particular stock exchange.
Delisting may seem bad for investors but in reality, it maintains investor confidence. If companies are given strict rules regarding delisting, then companies listed on the stock market will tend to maintain their performance to avoid being removed or delisted.
What Happen If Delisted ?
In addition to understanding the risks of delisting, you also need to know the consequences if a stock is delisted. Almost every stock exchange has companies that have been delisted. But what is more important is how it affects investors who own those stocks?
If the company whose stock you own is delisted, you will have difficulty selling the stock because it can no longer be traded on the stock exchange. Additionally, the stock price will likely decline because it is no longer traded on the stock exchange.
Nevertheless, it is still possible for a delisted stock to perform well in the future because the company may still have cash that it received during the IPO and has not used it all, so there is a possibility that the company can still be successful.
If the delisted company goes bankrupt, the stocks they own will have no value whatsoever, like burning paper money. However, it is still possible for the company to be acquired by another investor and saved because the company may still have important assets. In this case, other shareholders can sell their shares to the investor who wants to save the company or hold onto them until the company can perform well again.
Investing in the stock market carries its own risks that you need to understand, requiring high research and experience to maximize profits. You cannot just rely on money and hope that your assets will increase several times without comparable effort.
