How to invest in the stock market (with StockWatch.pl)?


More and more people observe stock exchange events with interest and try their hand at the market. Unfortunately, the lack of proper knowledge can lead to quick and large losses. In this text, I will try to deal with a few myths, briefly describe how the stock market works, how to invest and where to look for information. Most of the data and information needed by the investor are available for free at StockWatch.pl

How to invest in the stock market

Amateurs usually buy on the hill
StockWatch.pl has been on the market for over a decade. At that time, the stock exchange had its better and worse moments and enjoyed greater or lesser interest from investors. However, such a wave as now, where tens of thousands of new brokerage accounts are opened in six months, was not long gone. In the past, such situations usually took place on the so-called hill. The long period of increases on the stock exchange meant that more and more people decided to buy shares that were already expensive. It is said that when the taxi driver tells you what stocks he bought, it's time to evacuate the market.

how to play the stock market?
According to KDPW data, in March the number of brokerage accounts increased by nearly 30,000. This is the highest result in 9 years. Source: StockWatch.pl/Puls Biznesu

This time it was a bit different. New investors entered the market during the panic caused by the epidemic, and, for example, from the low in March 2020 to the peak in January 2021, the sWIG80 index gained approx. 100%. Back then, it was difficult to buy such a few companies to be in the red until today. It was not necessary to have knowledge about the functioning of the market, and this unfortunately leads to overconfidence, excessive risk-taking and, as a result, losses that can lead to life dramas.

Better to lose an opportunity than your money
It is easier to profit during a bull market, but it is never too late to start an investment and you shouldn't rush it. We do not start replacing the electrical system at home after reading the tips on the thematic forum or reading the book Electrical installations for beginners. It is similar with the stock exchange. On discussion groups, you can find advice that it's best to learn from mistakes and buy some stocks right away, even for a small amount. In my opinion, this is a way to quickly lose money that can be spent, for example, on the purchase of books or courses.

how to invest in the stock market?
This graphic, popular on the web, perfectly illustrates how and why investors who either do not have a plan (and if they do, do not stick to it) suffer losses on the market.

In order to invest rationally, you must first learn at least the basic mechanisms of the market, sources of information, rights and obligations of a shareholder, ways of analyzing charts, data and information, as well as psychological aspects. After selecting a few companies, it is enough to write down the names and dates of the hypothetical purchase on a piece of paper, so that after a month you will have material to analyze what went wrong and why. No unnecessary loss on your account.

Company valuation in six seconds
The most common mistake of novice investors is simplification such as using indicators without understanding them. Take the popular Price / Earnings ratio as an example. Let's start with the question, for how much will the owner be willing to sell a company that earns an average of PLN 1 million a year? According to the book theory, for a dozen or so times more. At a price of PLN 15 million, the Price / Profit ratio will be 15, and the investment will pay off for the buyer after 15 years.

However, it is impossible to reduce investing to one indicator and assess in a few seconds whether the company is cheap or expensive. In practice, many factors influence the valuation. What if the company earned PLN 1 million in 2020, but there is a prospect of dynamic profit growth in the coming years? Or an inheritance. Does the profit of PLN 1 million translate into the inflow of real money to the company, or was it created by accounting tricks? Is the profit recurring or is it a result of a one-off transaction, e.g. sale of a part of the company or assets? What if the development is financed with an expensive loan that can only be repaid in a very positive market scenario? What is the negotiating position of a potential buyer of 5 percent? shares, and what 100 percent buyer? What is it like when the company has financial problems and when the cash is full? And so on.

Let's analyze the case of CD Projekt at the beginning of December 2020, before the premiere of the flagship game Cyberpunk 2077. The profit for the last 12 months was then less than PLN 300 million, and the P / E ratio was over 100. Was it expensive? Does this mean that the potential buyer 100 percent. company shares would wait over 100 years for a return on investment? According to many "experts" commenting on the valuation on forums and Facebook groups, it was exactly like that. In fact, the company runs an unusual business where it works on a single project for several years and generates most of its profits within the first quarter of the game's release. The indicator tells you the past and you inwestujfinanse.pl the stock price looks to the future. Last year, the market tried to assess, among others the chances of Cyberpunk's success, the number of copies of the game sold, the average price, the length of the product life cycle, and the impact of these factors on the price. The result of these attempts is visible on the company's chart.

what to invest in the stock market?
The index analysis of CD Projekt has been invariably signaling a reevaluation of shares for many years. Click to zoom.

On the portal you will find dozens of indicators and financial data of companies. We make every effort to ensure that they are correct and take into account the current data, but they are calculated automatically on the basis of formulas and you must be able to use them.

The reason for the price increase / decrease is always the same
The market price is always the result of supply and demand meeting each other. Earlier, I mentioned just a few factors that can determine the valuation, but investors have to answer questions every day - buy? sell? Many of them, especially beginners, do not wonder how many copies of the game must be sold by CD Projekt this year for the valuation of PLN 30 billion to be at least reasonable. The market price may even for a long time be significantly different from a rational, logically reasonable valuation, but it is worth knowing it, because in the end we buy shares of a real operating enterprise. We have no influence on management decisions, but we have a small fraction of the company and the price of this fraction depends on its results. Even if we do not analyze them, institutions with large amounts of money do.

A fresh example of detaching the price from the so-called foundations is widely commented on the case of GameStop, a company listed in the USA. I do not want to go into the details of the entire action and mechanism of the so-called short sale. My only point is that an organized group of investors led to a significant increase in the company's share price. Suddenly, they generated a huge demand, and the price increase was followed by other investors who might not even understand the reasons for the increase. They bought because it grew. Unfortunately, this is another example of not understanding the rules. People who bought shares at the price peak lost several dozen percent of the amount invested in the following days. And that's probably not the end. In recent years, the share price has fallen from around $ 20 to a few dollars in 2020. It can therefore be assumed that this price range corresponds to the company's business situation, and the current price of several hundred dollars is only the result of investors' collusion.

On the other hand, the price may be underestimated because the shares are sold by major shareholders, e.g. investment funds or pension funds, which have to sell the shares to return money to investors or the state. They can also be founders and management staff. After all, each of them has their own life and may, at some point in the company's development, want to sell some of their shares to use for private purposes. Or maybe he knows that the company's prospects are not as good as investors say and is using the opportunity to get rid of stocks at an attractive price?

Fortunately, the law obliges companies and people who sit on their bodies to inform all investors about important events that could affect the valuation. The Electronic Information Transmission System (ESPI for short) is used for this. It is in the announcements that you will find information about the sale or purchase of shares by the president, a large contract concluded, the results of each quarter or changes in the company's management. The law also limits the possibility of using the marketing message in such an official communication, as opposed to public speeches of CEOs or presentations available on companies' websites.

Here too, however, special care must be taken. Again, I will use an example about gaming companies. Games in digital distribution go to the global market. If they respond to the needs of players, they can translate into huge profits for the company and the investor. But they don't have to. You should check what the company's business model is, who writes the game, who spends it and who finances it, how many entities stand in the queue to distribute the possible profit. It may turn out that the announcement about the great sale of the game at the premiere does not have any impact on the company's results, because the entire fee for writing it was received in advance and is already included in the published results for a long time. You should also remember about the risk of breaking the law by companies and management boards. With catching and punishing cheaters in Polandâ?¦ it can be different.

Where can I find information?
The main sources of information about companies include:

official announcements on the ESPI channel
media such as internet portals, blogs, television and radio
discussion forums and groups on social media
analysis of financial institutions such as brokerage houses
At StockWatch.pl, all ESPI messages are available on this page. Additionally, we aggregate the information contained therein.

how to invest
Click to zoom.

In the upper right corner of the page there is a search engine that allows you to search for all companies listed on the Polish stock exchange . On the subpages of each of them you will find, among others business profile, report dates, news, shareholding structure, price chart, financial data and indicators based on them. Most of the data is available for free.

We also publish several hundred articles on market events every month. We do not import them automatically from news agencies and we do not paste ready-made press releases sent by companies. We select the most important articles for you and remove unnecessary advertising message. Again, you can read the vast majority of materials for free.

We also run a moderated discussion forum where we care for content-related and cultural discussions about listed companies and investments. We remove from the forum all non-substantive, uncultivated and sloppy posts that make it difficult for users to quickly find important information on the forum and exchange views.

what to invest in
Click to zoom.

We also make sure that you can quickly check the rates of the observed stocks and find out in which companies something interesting is happening right now. In the table at the top of the home page you can check hot drops, rises, announcements, as well as the performance of the companies and indices being followed. By default, we present 5 results, but clicking the arrow will expand the list of up to 20 items. Important events in the businesses of listed companies are followed by large changes in prices, turnover or the number of transactions. Our algorithms analyze a number of price performance indicators and identify companies that behave abnormally. Above the table, we also present the quotes of the ten most recently visited companies.

The "Watchlist" tab in the above-mentioned table is one of the many places where you can access your Watchlist. You can also use it by clicking "Show filters" on the technical analysis tool page, in the stock scanner, valuation ranking, dividend subpage or the list of announcements. Thanks to this, you will find information about companies that you have in your portfolio or are considering buying them faster. You will also receive an e-mail notification about the planned chat with the president, as well as about the published analysis of the report. Subscribers of the Premium Zone also receive e-mail notifications about all ESPI / EBI messages of the observed companies. In the user panel you will also find the date of adding the company to the list and the percentage change from the beginning of the observation.


â?¡ Join 75 thousand registered users of StockWatch.pl â?¡ Create an account
The easiest way to add a company to your watchlist is to find it in the search engine in the upper right corner of the page and click the Follow this company button. However, this can also be done in several other places on the portal, e.g. on index pages, sectors or in stock scanners. Importantly, all these functions are free. Just create an account.

stock market investments

Where to find knowledge and analysis?
We also offer professional analytical support in the paid Premium Zone. Every year, we publish several hundred reviews of companies' financial statements, as well as twice as many analyzes of price charts. The companies for the analysis are selected by the subscribers themselves. Qualified analysts with many years of market experience are responsible for their preparation. In addition to analyzes in the Premium Zone, you receive additional data, indicators, e-mail notifications and investment support tools. This service is used by analysts of brokerage houses, investment fund managers, as well as individual investors who already know the basics of the market and are looking for help in analyzing the business of listed companies.

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Click to zoom.

We also run a model investment portfolio. The aim of the Four Phases of the Market project is to educate investors in the field of building and practical use of investment strategies. It is addressed both to people with investment experience who expect support in selecting companies and want to develop, and to beginners who do not yet have a brokerage account and do not know how the market works. Contrary to many services available on the market, our portfolio is not a demo or transactions made in Excel. We invest real funds in the real market, and the rate of return takes into account costs such as brokerage fees. Twice a week, a newsletter is published discussing market behavior and positions taken. It is thanks to the observation of real transactions and analyzes of the lecturer that subscribers can learn the specifics of investments on the Polish stock exchange and use practical knowledge in their investments. In addition to regularly discussing the situation in the portfolio, the instructor answers questions from subscribers about other values, as well as explains the secrets of technical analysis and market mechanisms.

The third service is Training Efficient Technical Analysis. There is a popular slogan on the web that technical analysis does not work, but this is mainly said by novice investors who do not understand it. Leading y The Four Phases of the Market project (and training) has been making money for 10 years using mainly this method. Investing cannot be reduced to a few numbers and simple buy / sell signals (see example P / E ratio). Technical analysis itself is also defined differently. Thanks to our training, you will learn how to read price charts, how to properly conduct a position, set stop loss orders, manage investment portfolio risk and what psychological pitfalls await the investor.

A wealth of features and possibilities
It is not possible to explain everything in one text and only indicate the right path. My goal was only to arouse interest and show you where you can look for information and knowledge. On the portal you will find a lot of interesting content and data that we provide for free. You can also choose from paid services that will facilitate investing or help systematize and accelerate your learning. Below is a list of links that are worth visiting that could not be cleverly included in this already long text. I wish you successful investments!