Things to Know about A Company Before you Invest

What to know before you invest

You Should Read This Before You Invest

It’s common sense for investors or traders to do their due diligence prior to investing, unfortunately, many of them disregard this important part.

If you happen to be in this category of people this post is written with you in mind.

investing in the stock market requires lots of time, if you’re a very busy person, penny stock may not be a good option for you.

you’ll probably have to invest in the larger companies.

If you’ve been reading my previous posts you have a good idea of how much of emphasis I put on time requirement when it comes to stock trading.

As investors, we tend to forget that behind each ticker symbol stands a company and when you buy shares from a ticker stock symbol you’re buying a tiny piece of a company.

As a result, it becomes extremely important that you now the company that stands behind the ticker symbol you’re buying your shares from.

Here’s what to do…

Look up the company’s name associated with the symbol

Obviously this should be your starting point.

you will have to look for the real name of the company so that you can research further for its activities.

Once you have its name it’ll be easier for you to look it up through your preferred search engine.

Conduct a little research on the CEO

Whether it’s a small or a large company it’s very important you know who’s the owner or the CEO.

Oftentimes, knowing the CEO’s background can help you pinpoint some interesting points concerning your potential investment.

You would want to know about the companies that the CEO has worked for in the past. You have to know how was the experience for him or her.

Furthermore, look to see if the previous jobs have anything to do with the current one.

Knowing these little details can take you a long way.

The CEO should be someone who thinks outside the box. According to Stephanie Shung, a contributor on Inc –

While it may seem like an obvious fact, the market changes with the times. It’s important to think outside the box because sometimes there are better ways to achieve business goals. Sometimes, the same tried and true methods don’t always work. When a CEO thinks outside the box, it makes them and their company stand out to customers and prospects.

She couldn’t have said it any better; in fact, change in strategy is very important sometimes for a business.

Which could potentially affect the whole company in a very positive way.

Nonetheless, a CEO should know when it’s the right time to do so. Therefore, being able to know when the current strategies have become obsolete is a plus.

Do you have any good strategy to help you trade successfully? Some Proven Strategies to Help you Make Money Trading Stocks.

Look at the products they’re selling

You’ll be surprised to see how many penny stock companies out there that don’t have any products on the market. I mean, zero product and they’re marketing themselves as legitimate companies.

Fake penny stock companies would do anything to prey on investors who aren’t doing their due diligent. But if you do dig just a little deeper for information you should be able to make some good decisions.

On the other hand, if you were able to spot the products that the company is selling, don’t stop there, go a little further into your research.

Check how the products are doing on the market, how’s the demand for the products.

Look how long they’ve been selling their products and which way is their selling trend on the market.

Some products tend to do better during a certain period of time. Some sell better during a specific season.

It becomes crucial that you look into this to know whether or not it’s the right time for you to invest your money into such a company.

In which cycle is the product’s life?

You’ll definitely have to know this piece of information before you invest.

Products life is believed to have four stages – introduction, growth, maturity, and decline.

At the introduction’s phase, according to Carol Kop,

The product introduction phase generally includes a substantial investment in advertising and a marketing campaign focused on making consumers aware of the product and its benefits. 

The next three stages, growth, maturity, and decline pretty much define themselves.

Buy in at the right stage can make a huge difference in your gains; therefore, you’ll have to try to pinpoint the product’s cycle.

The decline phase is where you wouldn’t want to invest in any company or product as it’s where you’re more likely to lose.

Other than that, you should be safe at any of the other stages, such as growth and maturity of the product.

As long as the other factors don’t affect you negatively.

Take a look at the income statement

It’s one of a company most important reporting statements which report how such a company has performed over a specific accounting period.

A company’s income statement can tell you a lot and you don’t have to be an expert in order to get the information you need from them.

Anyone can look at an income statement and know whether or not the company has had a good year or period of time. No need to be financial educated person.

data pertaining to sales and net profit or loss can be easily spotted on that statement, and information as such is extremely important to investors and potential investors.

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Now what …?

After having gathered all your needed positive information before you invest, it’s time to move forward and buy some shares from your chosen company.

it’s always better to diversify your portfolio when investing; therefore, I would suggest you use ten percent of your portfolio per company.

It’s not for no reason they say “Don’t put all your eggs in one basket,” it’s a risky practice to invest 100% of your portfolio in a single company.

Set a specific goal

Buying shares is just the beginning of the process as you’ll have to monitor your positions to be sure they meet your expectation.

There are many reasons that can make you sell your shares prematurely.

As a result, you’ll have to always be ready to make changes in your portfolio when the occasion arises.

Putting it all together

Buying stocks isn’t only buying a tiker symbol, it’s rather buying a tiny piece of a company.

Always prepare yourself prior to investing your money.

Don’t rely solely on others advises, it’s better if you can do your own research and see things first hand.

I hope this post was helpful to you.

Don’t forget to share it on social media and on forum platforms, as well as commenting bellow if you have anything to say or ask.