For many Jamaicans, the stock market is one of the least understood financial vehicles available to the general population. Everyone understands ‘throwing partner’ and can tell the exact date of their ‘partner draw’ and what they intend to use that draw for. However, not many of us know that you can buy a company’s stock and at some point in the year, be paid dividends. If you then need that money for the previously mentioned intention, you are free to sell the stock and keep the dividends.
The catch, however, is that you might not get back exactly what you paid for the stock. In some instances, you get more, in some instances, you get less than you invested. The onus is on you to consult with your stock broker, find the stocks you think would like to own. Find out their dividend policies, some are quite generous to stockholders, other companies believe more growth (and thus lower dividends) will lead to higher stock prices in the future. There is a blend of these companies on the Jamaica Stock Exchange.
Unfortunately 2012 was not kind to the Jamaica Stock Exchange Index and even meaner to the Jamaica Junior Stock Exchange Index. This blog will not speculate as to why this is so, but feel free to do so through your comments!
Fortunately, however, December ended with a bang for the two indices as both were up more than 2% from November. In fact, the Jamaica Stock Exchange Index reached its highest close on December 31, 2012 since January 31, 2012. The chart below shows an upward trend for the latter part of 2012. Maybe 2013 will be better? Regardless, if you were to invest in the entire index on December 30, 2011, you would have lost 3.3% if you sold it on December 31, 2012.
The trend is definitely heading northward, possibly back to the peak seen in November 2011. However, this is just a chart. diGJamaica strongly recommends that you speak to an investment professional before making an investment in the stock market.
Looking at the Jamaica Junior Stock Exchange Index the picture is somewhat different. After peaking in November 2011, the index retreated furiously and has flattened out and remained so for the entire 2012. Unfortunately, if you invested in the entire Junior Market Index on December 30, 2011 you would have lost 13.5% if you sold it on December 31, 2012. On the other hand, if you invested in the entire Junior Market Index on December 31, 2010 and sold it on December 31, 2012 you would have gained 71% on your money!
Please feel free to comment or correct anything said here. And if you have any speculative reason as to why the Indices retreated during 2012, your comments would also be welcome.