Chicharros on the stock market are those small capitalization securities that have extreme fluctuations in their prices. They are the favorite of investors speculators as the volatility in their prices is their main common denominator. Is about small companies that are not well known and that they generally have serious problems in their business accounts. Not surprisingly, it is quite common that they have debts in their lines of business.
They are reduced to a series of securities that are listed on the national continuous market. Although they are also represented with great force in the Alternative Stock Market (MAB) which is where companies that meet these special characteristics are listed. The peas tend to behave in the financial markets in an exaggerated way. Their stocks rise and fall with great force. Much more than in the rest of the Spanish equities.
This year is not being very positive for the national stock market that it is leaving close to 10%. In a year dominated by the uncertainty of the financial markets. Anyway, there are always exceptions, and one of them comes from these values, the peas. In some cases they are achieving revaluations close to 100%. Something that traditional values could not do at any time and under few conjunctural scenarios. They are conducive to generating significant returns on capital for small and medium investors.
Why are they called chicharros?
This curious name comes from many years ago. Where investors used this expression to refer to a series of listed companies that had very well-defined characteristics. With low volume of recruitment and that they had a very small part of their capital to be listed on the equity markets. This term is widely accepted by stockbrokers and remains in full force to this day.
The chicharros is synonym of risk and large fluctuations. With few titles, the price of the shares can move at the whim of the buyers. As a consequence of this particularity, they are very easy to manipulate, without offering guarantees to retail investors. Because in effect, they suffer the actions of the different brookers who can move their titles at will. In one sense or another, as you surely know. With very aggressive results.
Its evolution in financial markets is always erratic. You can check how in a stock market session goes up 10%, to fall under the same percentages the next day, or even more virulently. Very few investment strategies are worth to operate with them. It is more about an act of faith than anything else. They can make you earn a lot of money, but at the same time run the risk of leaving you many euros along the way.
It is the moment of these values
One of the great surprises that the stock market is preparing during this year is the irruption of these values in the trading table. While the traditional values are not generating happiness to the buyers, the same is not happening with the mentioned peas. They are without a doubt being one of the stars in the equity markets. Some of its representatives have appreciated above 50%. This means that if you have invested 10.000 euros in any of these securities, now you would have a return close to 5.000 euros. Excessive for the times in all financial markets. It is one of the maximum returns to which you can aspire. In any investment market, not just the stock market.
In some cases it is due to mere speculative moves. But in other cases, the effects of these increases are due to improvements in their business lines. And in one way or another to the reduction of your business debt. Of all, it may already be a bit late for you to open positions in their stocks. Because it would be little rational for the denominated values to undertake another upward spurt like the one that some of its best-known representatives in the national stock markets are experiencing during this year.
Prospects for the coming years
From this scenario presented by pea peas, it cannot be ruled out that there will be notable corrections in their prices in the coming months. They can also be very strong, just like on the climbs. Nothing is moderate in this class of titles. In any case, what does not seem logical is that the peas will present increases of this magnitude for the next few months. Because it cannot be forgotten that many of these have been produced with a very small volume of recruitment. This is an indication that the hikes are not reliable and do not offer the necessary consistency to continue with this escalation in their prices.
Specific and very strong rises are not ruled out that you can take advantage of if you are very agile in operations. Any delay in purchases can derail the illusions placed on these small second-rate companies. Even with the possibility of getting hooked on their values. This is because they are few liquids and you can be left with a lack of buyers. It is one of the risks involved in hiring. Unlike those listed on the selective index of the Spanish stock market. You can enter and exit them as soon as you want. Without any problem.
Values of these characteristics
There are several proposals that the national variable income generates. From almost all sectors and with a different nature. One of them is represented by Technocom, leader in the profitability of the shares. Nothing less than 86% in the returns of its shares during the current year. It has not stopped rising in the markets, month after month. In an interrupted way and as if this bullish channel through which it passes has no end.
Another suggestion within the pea sector goes through the Dogi textile company. 2016 is definitely being his big year on the stock market. With a revaluation of almost 70%. Where buyers are imposing crystal clear short positions. Precisely in a value that has been stagnant for many years. But its explosion in the equity markets has been brutal. With little-seen margins in the stock market.
There are other values that have risen a lot during these months, although without the strength shown by the previous examples. Either way they are moving from modest percentages of around 10% to 50%. Some of them are even in a position to take on new challenges for the coming months, and especially if the evolution of the financial markets accompanies them.
Strategies to invest
In any case, it will really be necessary for you to define your actions with these kinds of values. They will not be the same as when you have opened positions in BBVA, Repsol, Inditex or Gas Natural. They require a different treatment on your part that you must give it if you want to complete the operations successfully. That would be formalized from the following tips that we expose you below.
- Dedicate a part of your savings to the operations carried out with these very special values. If you don't want to take unnecessary risks that will penalize your personal accounts. Not in vain, prudence should govern all your actions from now on.
- You have to opt for terms of very short stays. Where to the first capital gains that you obtain, you will have no choice but to close the operations. Even with the risk of losing part of the increases in these values.
- Although they are pea values, you must be very selective in shopping and go to those who have the best technical aspect at that time. Or at least they present a very well-defined uptrend.
- You will have to assume that you can lose a lot of money in the operations that you open in the financial markets. They will be more than you can imagine from the beginning. So that in this way you act with greater diligence than in other safer values.
- You will have no choice but to assimilate the strong oscillations that will generate the peas. They can encourage you to sell the shares ahead of time and with worse conditions in relation to the price of the company.
- Don't try to resemble this kind of trading on the stock market with those employed with the most conventional values From the market. They have nothing to do with it and move under diametrically opposite guidelines in their price. Do not forget.
- You need set goals for yourself as a necessary formula to protect invested savings. And when you meet them, there will be no alternative but to close the positions. Keep in mind that the peas are not indicated to operate for very long periods of permanence. If not the opposite.
- They will be constituted in a complement to other operations you do on equities. But in no case, will it be your main proposal. Of course not, since then you would be making a very serious mistake that in all probability you would pay dearly later.
- Before shopping, take a deep value analysis and check what is the real status of the company. It is not advisable to buy peas at the first exchange, without knowing anything about your line of business.
- Every time you formalize one of these operations, you must bear in mind that they are values that do not pay their shareholders any dividend. In neither scenario. As a consequence of this business strategy, you will not have to wait for other income when buying their shares.
- It is an option if you want to risk, in exchange for expanding the returns with respect to the securities with which you have almost always operated.