What does Johnson & Johnson do?
Johnson & Johnson is one of the largest and oldest American companies. It was founded in 1885 by Edward Johnson along with brothers James and Robert Johnson, taking their surnames as the company name. Since then, the company has grown to the point that Fortune magazine ranks it among the 100 largest companies in the United States.
Initially, the creators' idea was to manufacture and market a line of ready-to-use surgical-grade bandages. But as time went by, Johnson & Johnson added more products to its catalog, although always related to the health area.
This is how it went from bandages to produce a wide variety of items that can be framed in pharmaceuticals, medical devices and consumer goods. All this is marketed around the world with its more than 250 subsidiaries that are located in 60 countries and distribute to the rest.
Of the product categories mentioned above, pharmaceuticals are the ones that generate the most revenue for Johnson & Johnson, representing 50% of the total. This is followed by medical equipment with 33% and consumer products with the remaining 17%, which are marketed under the Johnson's brand.
In addition to the above, another important aspect of this company is that more than 50% of its revenues come only from the United States. Some 23% comes from Europe, 18% from Asia and Africa and 7% from the Americas, excluding the United States. This gives us an idea of how important the American market is for the company.
Johnson & Johnson for investors
If there is a perfect stock it would be Johnson & Johnson for several reasons. The first is that it is one of the most solid and consistent companies out there today. Also, as we mentioned, it is among the largest in the United States.
Another important point is that its share price, although historically not very volatile (which is appreciated), grows year by year. So much so that, if we compare the growth of Johnson & Johnson's share since its foundation with the growth of the SP500, which is taken as a gauge of the American economy, Johnson & Johnson is the winner with a great advantage.
Finally, this company has almost 50 years paying uninterrupted dividends to its investors and this is something that few companies have achieved. To this we must add that they are growing dividends that the last 20 years have increased on average 10% per year. This makes it a must-have stock for any investor.
What are the assets you can trade?
What is an ETF?
What do you know about Exchange-traded funds or ETFs? They are passively managed funds, known for combining the benefits of stocks and mutual funds: they can be traded at any moment in the market, but offer much more diversity and considerably lower fees.
About Index Funds
This is the best option for people who can invest in the long term, especially for beginners, because it is less expensive, diversified, and safer.
You may think differently, but beating the benchmark is far from being a piece of cake and very few fund managers have done it, apart from some famous cases, like Warren Buffett's.
In practice, all that glitters is not gold: if a fund manager achieves to beat the market, it is only for a short time or on a specific occasion. Or perhaps they would charge very high fees and indexing would be a better decision anyway.
With index funds, you won't be concerned about that: although in the long term, they frequently beat active managers, and the commissions are so much lower.
What is known as Forex trading consists in the exchange of currencies. It's the conversion of one currency to another, and the aim is, evidently, to obtain a benefit out of this.
If you decide to exchange the EUR/USD pair, for example, you speculate how many dollars it will take to buy a euro, thinking that the euro will raise its price compared to the dollar. Therefore, if you purchased each euro at 1.15 USD and you sell them back when their price is 1.20 USD, you'll be earning that difference.
You may be thinking that this form of trading requires investing considerable amounts, and you're right, because fluctuation in prices is never that dramatic, and often you will need to use high leverage (which is an important risk). In case you are just starting in trading, it is not a good idea to begin with this market, because it is very risky and intricate.
This broker allows trading with the most common currency pairs but consider that Forex functions through CFDs, which means the underlying asset won't be yours.
About Contracts for Difference
It is possible that you have found the term CFD all the time if you entered this broker before. Before we come back to it, we must say that cryptocurrency operations on this broker are only CFDs if you short sell or choose leverage over x2 (but the platform does not even allow this).
For your information, and if you want to try at some point day trading cryptocurrency and other more advanced operations, you will also find information about concepts such as leverage and “going short”.
Even if you aren't “in the black”, you can still operate on this broker with CFDs. Let's say that you are sure that the Johnson & Johnson will fall, so the logical thing is to think “if it is going to depreciate, I'll simply wait until it does”. However, if it really falls, it might mean extra money for you.
You can accomplish that by “going short”. Here's how it works:
- You ask someone to lend you, for instance, 100 units of Johnson & Johnson, which cost $ 5,000 at the moment (obviously, these numbers aren't real)
- You get $ 5,000 by selling them at the market price
- The Johnson & Johnson goes from $ 50 to $ 30 (as you presumed, it devaluates)
- Again, you purchase the 100 units, but at the current price, $ 3,000
- You return the 100 units to the person that loaned them to you
- You will have made $ 2000, since you keep the difference
It all seems more complex than it really is. Just bear in mind that by trading in Johnson & Johnson on this broker, you can make a profit when you anticipate downs.
Trading with leverage
If you still don't know what “leverage” is, we'll put it short: it is, simply, the ability to use a higher amount than you actually have. For example, you can enter with $ 100, but if you leverage x2, your initial investment will be $ 200.
Leverage, Take Profit and Stop Loss
Let's pretend that you have complete certainty that Johnson & Johnson will raise its price, and you want to “go long”, but you only have $ 1,000 available. However, you have the option of investing more money and get higher profits.
There's the possibility of requesting a loan, but it is a process that takes time, and when you receive the money, Johnson & Johnson might be already at a much higher price, so you wouldn't be able to invest the way you planned.
Leverage is like a credit, but it is only a few clicks away! You will be able to operate with much more than what you have on the platform's wallet. It is really simple, before investing you will see the different options as in the screenshot:
When trading in different markets you can use higher leverage. This is because cryptocurrencies are a value that is invested in the medium-long term. However, leverage is used especially for day trading or short-term operations. But let's deepen a bit more on how all this works.
If for your investment of $ 1,000, you use leverage x2, you will be investing $ 2,000. Your broker puts the remaining amount to reach that figure.
A couple of days pass and turns out that you were right: Johnson & Johnson price increases by 20% and the value of your investment is now $ 2,400. Ok, don't be greedy, it's time to sell.
You will have to give back the $ 1,000 of leverage and you will have made $ 400 (since the other $ 1,000 was your initial investment).
In conclusion, by investing $ 1000 and obtaining $ 400, your net profit would be 40%. That is quite good.
But not everything is wonderful. If everything goes ok and the asset increases, you will make money. However, if the asset decreases, you will also lose more money than you invested.
For example: if the price falls by 10%, you won't lose $ 10, but $ 20. That is why to operate with leverage it is fundamental to know about Take Profit and Stop Loss.
Take Profit is used as a form of reducing risks when trading. When you enter, you can set a profit limit and ask that your position is automatically closed when the asset reaches a price.
If you bought Johnson & Johnson shares at $ 100, you can ask the broker to close your operation when it reaches $ 120. That way, you make sure you won't change your mind and decide to wait a bit longer in case it keeps rising, which could make you lose it all.
On the other hand, when using leverage you also have to use Stop Loss, because a small fall in the price of an asset can have a big impact on your wallet. Always remember to establish a Stop Loss more tight than that suggested by the broker.