Stocks: terms of purchase

купить акции российских компаний

In the previous article, we tried to uncover the theoretical basis of the shares. In this article, we will briefly describe how to buy stocks. If you are a newbie and are not willing to invest large  then you may buy shares in Russian companies in just a few minutes, and all paths lead to the broker.

How to buy shares of Russian companies

Conditions of purchase of shares of Russian companies can be divided into two parts: Amateur and professional.

  1. How to buy shares of Russian companies by professional traders

The next course of action:

  • to analyze the conditions of the brokers that offer the securities of the Russian Federation. Pay attention to the spreads, hidden fees, the swap, fee for downtime and withdrawal. Read the reviews about the broker;

  • check who is the regulator of the broker, it is not advised to trust the domestic regulators, as there is no relevant legislation. However, offshore regulators are also of little help in case of problems;

  • check on the MB website, whether the broker has access to trading (find it in the lists of members of MB);

  • sign a contract in the broker’s office. Download the platform from the broker’s website or from the developer’s site, check beforehand whether the platform is compatible with the functionality of the broker;

  • replenish the deposit, preferably via credit card (in case of problems, chargeback procedure, is possible), start trading.

  1. The purchase of shares by non-professional investor

To non-professional investors belong those who either just starting work as a trader, or considering stocks as a passive income. In this case, the contract is optional! Options how to buy shares in Russian companies are the following:

  • Mutual funds. The investor selects the mutual funds previously analyzed the NAV, portfolio of investments and existing assets. In the office a contract for the purchase of the unit is signed, which then is returned to the investor with a profit or a loss. Advantages: large selection of mutual funds, almost no need in the analysis of the securities market. Disadvantages: relatively small yield with relatively large risks;

  • The difference of individual investment accounts from professional trading — the limit of maximum deposit amount and a simplified version of the platform. Benefits — tax benefit of 13%, a minimum entry threshold. Disadvantages — the contract should be signed in the broker’s office, and you should be well versed in the securities market and analysis;

  • various brokers’ applications. Example — Tinkoff service. Cons — high commission and limited access to assets. Pros — mobility, time-saving.

And finally, a vivid example of the error of investing in shares. Alas, this error is characteristic of novice investors who are not knowledgeable about the markets, and brokers themselves pour oil in the  fire, giving inadequate (deliberately losing) recommendations.

In 2016, investors rushed to buy securities of public companies, which should pay dividends (this obligation is enshrined in law). The logic is as follows: buy the stock, collect dividends, sell shares. An example – papers of “Gazprom”:

  • in April 2016 the first information appeared that “Gazprom” will pay dividends more than expected;

  • on 29th of April the price reached a peak of 168,47 rubles;

  • May 17, officials agreed with the amount of the dividend, closure of register assigned to 20.07.16 dividend payment — August 1;

  • 06 the shares were worth 134,04 rubles — the lowest since March.

кquotes of Gazprom shares

The formation of a list of closed registers the of the year is held in March-April, in May the approval of the lists is performed,  the payments occur in the middle of summer (July-August). This order is not common to all companies, there can be a quarterly payment, the list of register closure  can be found on the Internet. Similar situation is with “Severstal” (the closing of the register 05.07.16):

quotes of Severstal shares

On the 25th of April the papers were at their peak, during the closing of the registry at a minimum. Closure of registers of MTS took place 05.07.16 and 14.10.16:

quotes of MTS shares

On the 15th of June, there was a peak of activity of investors hoping to earn dividends on the shares, but the minimum occurred at 07.07.16. Moreover, the amount of dividend per 1 share did not block the fall in the value of the paper itself! In October, the situation was similar: on October 11with the last day of closure, the paper prices dropped sharply and returned to this level in December!

You still want to buy the shares of Russian companies at the time of payment of dividends? A bold decision. And not always unprofitable. After all, why there is a drawdown? Imagine a stable free market: the company’s shares worth a fixed amount, with the net profit of the company grows and the stock price. In other words, price of the share is confirmed by the production. But the decision on payment of dividends is announced and everybody decides to buy shares of Russian companies to obtain dividends. The price goes up… and after payment of dividends, the speculative capital goes back, attacking the value of securities. Alas, with the collapse of the stock leaves the medium-term capital, because the drawdown is more than speculative growth. The conclusion:

  • sooner or later a strong securities will play a failure. If you buy securities with the expectation of dividends, prepare for the fact that the drawdown will win in 1-3 months. The received dividends, should be devided by the number of months of recovery — the only way to learn the real return of investment;

  • during the formation of registers the amount of dividends per share is already known in advance. It is enough to analyze past payment periods to understand how big the drawdown will be and how fast the recovery will be. Calculation of investment efficiency should be performed by yourself;

  • not all companies obey this rule. For example, the exception — “Rosneft”. Schedule of quotations steadily rising, but the reasons are individual.

Summary. Investing in the securities is not less complicated than working with platforms in the Forex market. Plus of stock purchase — low threshold of entrance in comparison with Forex using ISS and other applications of brokers (tax benefits), minus — high brokerage fee. There is no need to understand the toolkit of platforms (if we are not talking about professional investing), but the understanding of the work of the securities market, the behavior of quotes, stock chart analysis over the last 1-3 years — all this is required to the investor who wants to get profit. And do not chase quick profits! Speculation is only available to experienced traders who work with large volumes and newbies often suffer losses on the speculation.

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