Explore the World of Stock Investment: From Basics to Profit Strategies

In recent years, the stock market has become one of the most popular investment options in Vietnam. However, to succeed in this field, investors need to understand the basic principles, risk management strategies, and factors affecting stock prices. This article will help you grasp the essential foundational knowledge before entering the market.

What Are Stocks and Main Types

Stocks, also known as equity securities, are certificates representing the amount of money you have invested in a company. When holding stocks, you become a shareholder of that enterprise. The stock market is where investors buy and sell these certificates.

There are many different types of stocks in the market, each with its own characteristics:

Common Stocks are the most basic form, representing ownership in a company. Holders have rights to dividends, voting, and free transfer. Examples often mentioned include FLC, VHM, VNM.

Preferred Stocks offer certain advantages over common stocks. Holders receive higher dividends and have priority when the company distributes profits, but usually do not have voting rights. Companies like VCB, TTF issue this type.

Bluechip Stocks are shares of large, globally leading corporations with high stability. This type attracts conservative investors seeking long-term safety. Typical examples include AAPL, GOOGL, MSFT.

IPO Stocks are newly issued shares to the public for the first time. They are usually inexpensive but carry high risks due to volatility. Experienced investors should consider this type.

Domestic Stocks are traded on Vietnam’s three main exchanges: HOSE, HNX, and Upcom. Codes like CTG, HRC, VTP are listed here.

International Stocks are shares of foreign companies listed on international exchanges. To access these assets, Vietnamese investors often need to go through specialized brokerage platforms.

OTC Stocks are unlisted stocks traded outside official trading centers. These are highly volatile and not subject to strict regulations.

Penny Stocks or “fly” stocks are certificates with very low prices, allowing investors to buy large quantities with little capital.

Defensive Stocks are certificates of companies operating in stable sectors such as pharmaceuticals, consumer goods, and livestock. These are less affected by overall market fluctuations.

How to Make Money from Stock Investment

There are two main methods to profit from stocks. First, you can buy securities with growth potential or undervalued, then hold for a long time waiting for the price to increase. This is the strategy successfully used by legendary investors like Warren Buffett. During the holding period, you also receive dividends from the company.

Second, if you prefer short-term trading, you can take advantage of short-term price fluctuations. Buying low and selling high is a way to generate more frequent profits.

Three Different Forms of Stock Investment

Direct Investment is the most straightforward way—you buy and own the securities. The advantage is that you truly own the asset, receive dividends, and are not affected by leverage. The downside is that it requires significant capital and profits are proportional to the invested amount.

Derivative Trading with Leverage allows you to use a small amount of capital to control a larger value through contracts like (CFD) or other tools. The advantage is capital optimization and the ability to profit from both rising and falling prices through short selling. The risk is high if prices move against you, requiring good risk management skills.

ETF Investment is an indirect way—you buy fund certificates managed by specialized funds. The advantage is automatic diversification and less time spent monitoring. The disadvantage is that returns depend on the fund’s performance.

How Much Money Do You Need to Start?

The initial capital depends on the chosen method. In Vietnam, the general regulation is a minimum of 100 shares per lot. If a stock costs 6,600 VND, you need 660,000 VND for one lot. If it costs 67,000 VND, you need 6,700,000 VND.

With a 7% profit on 100 shares at 6,600 VND, you earn 46,200 VND. With 100 shares at 67,000 VND, profit is 469,000 VND. Clearly, smaller capital yields smaller profits.

If you have limited capital, derivative trading with leverage is a suitable option. For example, with 1:20 leverage on a Google stock contract priced at 2,418 USD, you only need an initial margin of about 120 USD (equivalent to 4 million VND). When the price increases by 7%, profit can reach 169 USD (about 3.8 million VND). However, leverage also amplifies risks, so use small margins when starting out.

In summary, you can start with 500,000 VND or more, depending on your type of investment and goals.

Trading Hours on Major Markets

Each market has its own trading hours. In Vietnam, HOSE, HNX, and Upcom operate from 9:00 to 11:30 and 13:00 to 15:00, Monday through Friday.

The New York (NYSE, NASDAQ) open from 20:30 to 3:00 Vietnam time. Tokyo opens from 7:00 to 9:30 and 10:30 to 13:00. Shanghai from 8:30 to 10:30 and 12:00 to 14:00. London from 15:00 to 23:30 Vietnam time.

Investors seeking flexible trading can use international exchanges that allow trading across multiple markets from a single account.

Factors Affecting Stock Prices

Supply Fluctuations: When a company issues additional shares (dilution), prices tend to decrease. Conversely, when a company repurchases its own shares, prices usually rise.

Business Results: Quarterly and annual financial reports are very important. Investors pay attention to cash flow, profits, and customer growth. EPS (earnings per share) should be as high as possible. The P/E ratio (price-to-earnings) being low may indicate undervaluation.

Macroeconomic Factors: GDP, PMI, retail sales, and bank interest rates—these figures influence trading demand. Low interest rates encourage stock investment, while high rates may push investors toward bonds.

Industry News: Forecasts or events related to specific industries significantly impact demand. For example, news about difficulties in the airline industry due to the pandemic caused stock prices of related companies to decline.

Investor Sentiment: Stock prices are not always based on fundamentals. Emotions, rumors, or actions of large investors can cause market volatility. Small investors are often influenced by herd mentality.

Advantages of Stock Investment

High Liquidity: Unlike real estate, you can sell stocks within seconds if needed. The market has many buyers.

Easy Diversification: With a few million VND, you can own multiple stocks across different sectors, reducing risk.

Low Costs: Transaction fees (0.16% - 0.36%) are much lower than real estate.

Multiple Profit Sources: Besides price differences, you also receive dividends and bonus shares.

Financial Tools Support: If trading derivatives, you can use leverage to optimize capital (but be cautious as risks also increase).

Important Notes When Investing

Before entering the market, new investors should:

• Understand the market operation mechanisms thoroughly
• Develop skills in fundamental and technical analysis
• Establish strict risk management plans
• Never use excessive leverage without experience
• Regularly monitor news and financial reports
• Start with small capital to accumulate experience

Stock investment can generate significant passive income but also carries risks. Success depends on knowledge, discipline, and risk management skills of the investor.