INVESTMENT STRATEGY IN STOCK

EXCHANGE

Vince Kresensia (1913099)1

Della Amelia Ceoputra (1913094)2
Wellya Octavia Pratiwi (1913086)3

ABSTRACT

Investor uses strategy and a certain technique to analyze different situation and condition
happened between one and other exchange companies. The strategy is developed based on
experiences, research result, analysis, and market surveys in a certain period. Articel is the first
part of three series which presents, evaluate, examine of the strategy, and consider tactics in
sharing share on the market. It is concluded that the investor should use money as loan that should
be payed as soon as possible for the sake of its interests.

Keywords: investation strategy, exchange and share on the market

ABSTRAK

Para investor mengggunakan strategi dan teknik tertentu untuk menyiasati situasi dan
kondisi yang berbeda antara satu bursa dengan bursa yang lain. Strategi tersebut dikembangkan
berdasarkan pengalaman, hasil riset, analisis, dan pengamatan pasar dalam periode tertentu.
Artikel ini merupakan bagian pertama dari trilogi yang memaparkan, mengevaluasi, menguji
strategi, dan taktik bermain saham. Disimpulkan bahwa para investor sebaiknya menggunakan
uang sebagai pinjaman yang harus dibayar secepat mungkin dengan bunga yang diharapkan.

Kata kunci: strategi investasi, bursa saham

Mahasiswi Universitas Atma Jaya Makassar

Investment Strategy in Stock Exchange

 INTRODUCTION

The rapid economic growth spurred actors to use various methods to maximize the
results of their business. Economic actors see that the increase in yields obtained in traditional
markets is delayed in achieving maximum yields so that various efforts are made through
technological advances. Then, the idea of developing securities was born that would accelerate
the flow of trade in the capital market.

Economic actors, hereinafter referred to as investors, seek to maximize the returns

invested with various instruments such as financial statement analysis and techniques used to
carry out investment actions. In general, there are many ways that are used and are universal in
investment that apply over time. With the analysis of financial statements and the techniques
used, market participants can maximize the expected return on investment. Many strategies are
used to generate the maximum rate of return with techniques used such as the January Effect
technique. This technique is used to deal with aspects of taxation that apply in America but do
not apply in Indonesia.

Thus, the technique used is highly dependent on the habits used in a particular capital
market. Therefore, market participants must be observant of the trends that occur in the capital
market and observe statistical data on previous stock movements and then combine various
analytical factors to make investment decisions.

DISCUSSION

Understanding Investment

The pattern of developing wealth has been carried out by people in ancient times until
now. However, there are several things that distinguish the pattern of wealth development in
the past and now. The pattern of wealth development in the past that has continued until now
is aimed at things in physical form such as land, buildings, livestock, vehicles, machines, and
all tangible things. This development pattern is better known as real asset investment.
However, with the development of the business world and today's mindset, the pattern of
wealth development has begun to shift, not only in the tangible sector but has begun to shift
to the field of securities such as deposits, bonds, foreign exchange, and stock portfolios. This
investment pattern is better known as financial assets.

Of all the activities carried out to increase wealth, it is essentially an investment activity.
In other words, investment is an attempt to allocate a certain amount of funds to one or
several available investment containers in the hope of making a profit. In investing in
financial assets, it is required to invest time in order to get the latest and concrete information
in investing in the stock market. Investing in the stock market requires a fast movement in
getting the rumors right as well as a certain skill in translating financial information and
reports in order to maximize the results to be obtained.

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 Capital Market Characteristics

Before investing in stocks, it is better to know the characteristics of the capital market,
especially the stock capital market. The first characteristic, like the nature of other current asset
estimates, securities such as shares is a liquid estimate because the market is ready to make sales
or purchases at any time.

The second characteristic is that sellers and buyers have the same opportunity to obtain
adequate information through various available information media. In order to obtain
concrete and accurate information, carefulness and extra effort are needed in finding
information to complete the decisions that will be made on our investment. Through this
information, it can be interpreted the impact of information and events that are currently or
will occur on the movement of shares on the stock exchange. For example, Bank Indonesia
announced a reduction in market interest rates. This will have an impact on the value of the
composite stock index on the stock exchange. A decrease in interest rates means that the
investment made by investors will not be as large as previously expected. They tend to look
for even greater returns on investments such as stocks that will probably pay more than
double the interest in the bank. Such things will be felt more by market players in developed
countries who are already familiar with the capital market. In addition to developed countries,
developing countries will also feel the impact of lower interest rates in America because
many foreign investors trade stocks in developing countries such as Indonesia. With so many
purchase requests, it will automatically increase the overall stock price index.

The third characteristic in stock trading, brokers will charge a fee for transactions that
occur both sales and purchase transactions with a fairly minimal fee of 0.3% for share
purchase transactions and 0.4% for share sales transactions. With minimal costs, it is hoped
that it will not become a burden for shareholders to sell and buy shares in a fairly high
frequency. Thus, stock trading can be empowered to encourage high turnover of funds in the
capital market.

The last characteristic of the capital market is that prices follow the information that
develops in the market. Like the law of supply and demand in economics, the higher the
demand, the higher the price of an object from the value traded. On the stock exchange, the
same applies to stock trading. When many investors make buying transactions, at that time
there will be an increase in the shares traded and indirectly raise the value of the joint stock.

Capital Market Participants

In other parts of the capital market, there are two types of markets that occur in the stock
market. First, it is known as the primary market. In the primary market, there is an offer made by
a company for its assets to a guarantor syndicate who is willing to bear all the risks that may
occur from the sale of shares issued by a company that will go public to be traded on the
secondary market. Companies that want to go public, before issuing their shares to the market,
must obtain an inspection from Bapepam which ensures that the company concerned is indeed
healthy and feasible. The audit is related to the increase in profit for the last five years, the
articles of association and by-laws, the number of shares to be issued and many other matters that
are examined related to approval

Investment Strategy in Stock Exchange

which will be given to companies that will go public. In this market, the guarantor syndicate gets a
price from a company that wants to sell its IPO shares on the stock exchange at a lower price or at
a certain discount. Once the deal is approved, a new guarantor syndicate offers to the secondary
market. The offer of shares from a guarantor syndicate to brokers on the stock exchange to the
public is known as the secondary market. In that market, all levels of society who have accounts
with brokers can make buying and selling transactions through brokers who have been registered
on the stock exchange, subject to transaction fees for buying and selling activities carried out.

Investment Nature

Through these brokers, market participants, who are then better known as speculators and
investors, make buying and selling transactions. Basically they are called speculators because
market participants only place their capital for a relatively short period of time (sort term)
expecting a relatively high rate of return from market price movements or are called profit taking
actions to take the difference between the selling price and the higher purchase price. Referred to
as investors because market participants are taking their capital participation for a permanent
period (long term).

Through this investment, investors expect dividend growth and higher price increases in
the future. For example, the formula for calculating the value of the stock price for a company
whose dividend growth is constant in the future is the formula P = D (1+g)/(Ks-g). However, it
must be realized that this formula does not apply to Indonesia's unstable economic and political
conditions. In management, the long-term investment pattern with a relatively large number of
shares (between 30% to above 50%) has control rights over the company based on the voting
rights owned. Shareholders' rights are usually subject to applicable laws and regulations in the
country concerned. Through this description, it can be distinguished between speculators or
investors, but what is clear is that both market participants include their capital in the stock
exchange.

Analysis Techniques

For market participants who aim to invest long-term, it is necessary to do a combination of

fundamental analysis and technical analysis. Through a careful level of analysis based on the
company's financial statements, the condition of the company can be known. From the results of the
resulting financial analysis and the ratios used, the financial statements with technical analysis can be
interpreted to become useful information in making the right investment decisions. Technical analysis
is intended for short-term investments that are more likely to see and hear economic and political
developments outside and within a country as well as management policies or rumors that exist within
the company concerned.

Investment Strategy
To obtain maximum results, various aspects of both domestic and foreign economic and
political developments must be considered. There are several ways to get maximum results such as
buying shares in the primary market and selling in the secondary market. This means that shares
are bought as a guarantor syndicate and sold through brokers to the public. In that way, a sizable
profit was obtained through negotiations with the company
Journal The WINNERS, Vol. 3 No. 1, Maret 2002: 79-87
which will launch an IPO stake of up to 35%. For that, large funds are needed. If funds are not
sufficient, you can buy shares in the secondary market with a minimum purchase amount of 1 lot
or 500 shares. To buy, you must know when to buy and sell.

Therefore, it is necessary to use previous data to obtain the most profitable (lowest)
purchase value by looking at the economic growth conditions that are predicted to experience
satisfactory growth and price increases in accordance with the expected margin. To get maximum
results, you have to play in a sector where the development of news and rumors can promise
maximum results.

Trading Strategy
In the implementation of stock trading, there are several things that must be considered. It
relates to the selection of a trusted and strong broker, the expected margin, anticipation of the
worst possible thing that will happen, and psychological factors.

Trade Execution

Case in point, an investor goes out of town. He entrusted 90 lots of shares and a sum of 20
million rupiah to a local securities company in order to continue to provide transaction orders from
outside Jakarta. When he returned to Jakarta, he was surprised by the disappearance of the shares and
the money deposited because the securities company had gone bankrupt (Kontan no. 41, year III, 12
July 1999). It is just a picture of an investor who was harmed by a broker. There are many other cases
that harm investors. Therefore, investors are required to be careful in selecting commission houses,
dealers or brokers.

Thus, we are required to be observant in seeking information about commission houses that are
fully competent in providing recommendations to buy certain stocks that promise multiple profits.
Based on these recommendations, we must also re-analyze the recommendations given with the reality
and the information we get, until we are sure that the recommendations provided will be beneficial. In
addition to the commission house, we also have to choose the right broker and according to our needs.
If we need investment advice, a broker who has a commission house support is chosen. If you want to
entrust funds to be managed by a broker, choose a broker who is licensed in the field of investment
management. If you want to facilitate investment in the primary market, investors should choose a
broker who has a license and is experienced as an underwriter.

In addition to commission houses and experienced brokers, it is necessary to pay attention to

the facilities and operating systems. We have to see if there are enough boots on the trading floor to
execute orders from customers quickly and whether the broker's back office system is adequate and
able to handle all transactions properly.

No less important is the capital structure. Maybe you are asking what big capital is needed by
brokers. Don't brokers operate with customer funds and earn commissions. The problem is, brokers
with large capital can offer more complete facilities such as hiring more and more experienced
analysts. The complete facilities provided mean that transaction speed and account opening are easier
to do.

Investment Strategy in Stock Exchange

 Trading Margin

Investment returns and risks are like two sides of a coin. It is unrealistic to want returns but not
be willing to take the investment risks. It must be realized that the expectation of every investment is
what tomorrow will bring, whether it be interest, dividends, capital gains, or direct operating profit.
There is no guarantee that investors will get the expected results. Bank interest can be undermined by
inflation, companies can fail to make a profit, and stock prices can decline.

Investors must be realistic in investing. In order to achieve the investment objectives, an

investment plan must be made in accordance with the available financial conditions. For example,
what is the expected return on investment and how much time is available to achieve the goals and
investment advice chosen. For this reason, it is possible to buy shares when the JCI is down because it
may make a profit.

Another technique of profiting from buying shares when in the market there are rumors or issues
developing about management reforms or possible acquisitions or mergers. At this time, it will
generally increase the market value of the shares traded. Then, the stock price will fall when the
managerial activities have been published. Profits can be realized if the estimated price is high.

You have to be careful if the price drops. For this reason, it is necessary to diversify by
dividing investment in several sectors with good prospects. This step was taken to anticipate the worst
possible market for stock trading on the stock exchange. If one stock experiences a decline in price,
the rotation of all investment funds does not stop because they can trade stocks in other sectors whose
prices have increased. Thus, risk sharing has been carried out. In implementing investment policies,
investors should choose stocks that give results in accordance with their goals. Based on the potential
yield, the stock category consists of four, namely income stock, growth stock, total return stock, and
speculative stock.

Income stock is an issuer's stock that has a relatively high and consistent dividend payment
policy. Investors should see the growth of dividends paid over the last five years. This type of stock is
the lowest risk stock. For growth stocks, investors prioritize the growth of the issuer's income and
profits rather than dividend growth. To see growth stock risk, investors can compare portfolio
performance with benchmarks that are evaluated once a year or every three months.

Total return stock is a stock that divides dividends and has a good stock price growth. That
includes blue chip stocks that have fast stock movements and volume. Speculative stocks have the
potential to provide large profits in a short period of time, such as new shares and issuers in industrial
fields that are in the development stage. For speculative investing, the biggest difficulty is keeping up
with the changing pace of the market as opportunities will appear and disappear within minutes.

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 Trading Psychology

From a series of transactions carried out, market participants may be affected by

psychological impacts such as high expectations of market participants so that the market
share price will increase. But if the long-awaited hope does not come true, you will
experience disappointment. Disappointment gives rise to protracted anxiety. All of this
happens because of the greedy nature of market behavior. It is a greed that must be avoided in
order to avoid loss. Another thing that usually happens to market participants is the attitude of
being too proud of the results that have been obtained. Because in the past, they had earned
quite a large profit, now they want the same thing so they lose. The tendency that often
occurs in market participants is to follow the market flow.

Many buy certain stocks without analyzing and seeking adequate information. In fact, it
will have a greater risk of failure such as being carried away by the ups and downs of prices
for a long period of time.

Trading Tactics

To deal with the various psychological effects of trading, the losses incurred can be limited.
How to find stocks that can provide capital gains. If the stock price drops, you have to sell the
stock at the right time. Replace these shares with other stocks that are expected to provide a
profit. In conducting transactions, market participants must analyze the ratio of risk and rate of
return to determine the profit and loss that will occur. This will train their discipline. For this
reason, it is necessary to determine the right trading time to maximize profits and minimize
losses.

In transacting, it is necessary to be aware of the available capital to place the appropriate

portion of the existing capital. For this reason, there are several assumptions used to calculate the
investment composition. Investments should use the funds that have been set aside. If there is a
loss or a decrease in price, it will not affect daily needs. By managing funds, unexpected
sacrifices can be avoided due to sudden needs.

Common Mistakes in Investment

Many market participants only follow the movement of market currents without
conducting a more thorough market analysis such as financial reports or issues that are
developing in the market. If not done, it will be an obstacle in obtaining maximum profit. For
this reason, it is necessary to avoid following the market because it is possible to get caught in
a situation when stock prices start to rise and a new investor enters, at that time other market
participants may have taken profit.

It is not realistic if investors refuse to lose. In investing, there must be a risk of loss or
profit so it needs to be anticipated from the start. Many market participants experience mental
shocks when they suffer losses due to falling stock prices. For that, they need to be heartened
in the face of the worst.

In addition to being realistic, market participants must also have an accurate analysis to
Investment Strategy in Stock Exchange
determine the return obtained. If it is not done, the capital gain obtained is not maximal known as the
origin of profit. If market behavior is unfavorable, market participants must change course to avoid
bigger losses. This must be done and do not be too confident with the initial analysis that has been
carried out because it is possible that the results of the analysis are not supported by a stable political
and economic situation. To read the situation, market participants can use their conscience in
investing. Conscience will sometimes give its own movement to the current situation in regional and
national markets for buying and selling transactions. In order for the investment returns to be of
maximum value, sufficient concentration is required to continuously monitor and obtain information
that is developing in the market. Thus, market participants should focus on certain sectors only to
avoid distracting or concentrating on developing information. The goal is to reduce losses and
maximize profits

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 CLOSING

Conclusion

Conventional wisdom says that investment should start with setting goals, namely,
expectations that are specifically defined. Investment objectives are very diverse, starting from raising
certain funds for retirement provisions, children's education costs, buying a house, car, or others to
generate an increase of, for example, 20% a year. Investment goals must be realistic so that they can
be easily realized. It is unrealistic to expect tens of times the return on investment in a month like
winning the lottery. Likewise, if you want capital gains on the stock market, investors must be
prepared to accept capital losses.

Investors should be prudent and make investment plans that are in accordance with existing
financial conditions, what investment returns are expected, how much time is available to achieve the
goals and the chosen investment means. In implementing investment policies, investors should choose
stocks that are in accordance with their goals. Based on the potential returns, stocks can be classified
into four categories, namely income stock, growth stock, total return stock, and speculative stock.

By determining good investment goals, making investment activities easier. The decision to buy
or sell shares is made easier because you only need to match whether a particular stock is suitable for
the purpose. If it doesn't fit, don't buy it. If the purchased shares perform below the target or
benchmark, investors can sell these shares and buy other shares. Selecting one or several hundreds of
stocks is a laborious, time-consuming, labor-intensive and costly task. The same is true for the
portfolio monitoring and evaluation process. If the investor does not have enough time, it should be
submitted to a professional investment manager or invest through a stock mutual fund unit.

Problems that are often faced by all savings and investments are emergencies and other situations
that require funds. This condition often interferes with a person's savings or investment. If it is
unavoidable, investors should treat the use of money as a loan that must be repaid as quickly as
possible with the expected interest. Wit In that way, they are encouraged not to be careless and always
alert to any turbulence in the market situation.

Investment Strategy in Stock Exchange

 BIBLIOGRAPHY

Bodie, Marcus Kane. 1999. Investments. Edisi 4. McGraw-Hill.

Cahyono. 2000. 22 Strategi dan Teknik Meraih Untung di Bursa Saham. Jilid 1. Jakarta:
Gramedia.

Kontan. 1999. No. 41 Tahun III, 12 Juli.

Weston. 1992. Manajemen Keuangan. Jilid 2. Edisi 8. Bina Rupa Aksara.

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