Stock
Market Investment Analysis
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How do I Evaluate a Potential Stock Investment?
The best way to get started in stocks
is to do a great deal of research before you invest any of
your own money. Choose a dozen stocks and then follow those
stocks carefully for a month or so. Watch how their prices
fluctuate. Monitor the overall market. Read everything you
can read on the internet and in books and investment journals.
When you finally get serious about
investing, start modestly. Try not to get caught up in the
lottery mentality or the get-rich-quick mentality that is
so pervasive in today's society. Successful investing requires
discipline and patience. Invest in stocks that you would not
mind owning for a long time and invest with money that you
feel comfortable parking in the market for the long term.
Before you invest, make sure that
you research the company thoroughly. Start by going to the
company's web site. Most companies will have a page or section
on investor relations where you will typically find general
information as well as detailed financial information. The
company's most recent annual report will provide a wealth
of information on the direction and condition of the company.
Don't necessarily assume that just
because you have heard of a company or that other people have
invested in a company that it will make a good investment.
Do your own research. Yahoo.com, AOL.com, CNNfn.com, and most
other major portals offer free stock quotes, charts and information.
If you open an account with a good on-line broker you will
generally get electronic access to real-time quotes and information.
It is not enough to learn about
the company in which you intend to invest. You must also learn
about its industry. You must learn of its competitors and
understand how it compares to its rivals. Come to understand
how the company generates its profits and how those profits
are likely to grow in the future. If the company does not
have a well articulated plan to grow both revenue (the top
line) and profits (the bottom line), then its stock may languish.
Investment
Diversification
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