Become A Great Investor By Researching Your Stocks
There are huge benefits to researching your stocks before you make a purchase! Do not invest in a company’s stock without taking the required time to do the necessary research! This is a sure way to lose money. You have to do an “adequate” analysis of the company you are interested in to invest successfully.
Ways To Research Your Stocks:
There are two methods an investor can use to research stocks: Fundamental analysis and Technical analysis. Fundamental analysis is concerned with analyzing the company’s financial statements, statistics, industry factors etc… Technical analysis, on the other hand, make predictions using charts and studying statistical trends.
I will later explain in detail each of these two completely different methods of analyzing stocks. It is a good idea to know what both of these methods consist of!
However, the majority of investors today use and place most of their focus on fundamental analysis. Some investors use one method of analysis while others may use a combination of the two.
With the advent of technology today, it is easier than ever to perform the above analysis of a company’s stock! Most of a company’s information is readily available for you online on financial websites such as Google Finance or Yahoo Finance! Yahoo Finance is an excellent website and will provide you with most of the information you need to make an educated decision.
Making Educated Stock Picks:
You want to make only “educated” stock picks not uneducated “guesses.” Make sure you examine each company, extensively, before rushing to click your mouse and purchasing its’ shares. Read everything you can including the quarterly and annual reports “beforehand” on the company you are interested in buying!
You should know what the company you are interested in does. What sector and industry is the company in? Do not buy stock in a company that you do not understand! On Yahoo Finance go to the top of the website and click on Profile for this information.
Only invest in areas you know best. As Warren Buffet says: “This would be going beyond your “circle of competence!” Do not invest in a company if you only have a limited understanding of it. Be sure to focus only on companies you have some familiarity with.
In addition, you need to know why you purchased your stock in the first place. Its’ a good idea to jot these reasons down beforehand. This could help you in the future should you have to decide whether, or not, to sell your stock. For example, if a company’s shares that you own start to decline, and you’re “tempted” to sell your shares, it would be helpful to refer back to your reasons for buying it in the first place. If your company’s stock still fulfills these reasons and is still fundamentally strong exercise patience and try not to sell prematurely. Selling, prematurely, may be a decision you may later come to regret!
How Is Management Performing?
It is also important that an investor check out the management of the company! Is management performing well and acting in the best interest of its’ shareholders? Is management growing profits? Is management generating income from the equity it has? Does management, going forward, have any “new” products in the making? In addition, an investor needs for management to be honest and possess integrity.
If you can’t research a company’s stock, thoroughly, forget about it! You won’t possess enough information to form a good quality decision. And, in the process, you may, unnecessarily, lose money!
In conclusion, before purchasing stock, in any company, make sure you have performed the necessary research! I cannot begin to emphasize this enough! You need enough information on the company’s stock you are interested in to make an educated and wise decision! This involves examining the company thoroughly beforehand by using either fundamental analysis or technical analysis, or a combination of both. In addition, it is also a good idea to check out the quality of the company’s management.
