What to look at when researching stocks?

Question

I would like to start investing, and whenever I ask someone for some advice they always tell me to research the stock as well as the company. What do I look at with the company and the stock when I do research one. Please help. I am new to this whole investing game.

Answer 1

Hi Jordan,

First, congratulations on getting started as an investor, it's a very rewarding hobby if you work hard to learn a strategy.  There's no better way to begin than to ask questions, very smart of you and a promising sign. Continue to seek lots of knowledge and never stop learning and you'll be building wealth in no time.

Many beginners are confused about what stock market investing strategy to choose, oftentimes they are even confused about what strategy they are currently implementing.  This happens because most people learn about investing from their friends, coworkers, family, and whatever investing related magazines, newspapers, and Internet sites they follow.  What they wind up with is a hodgepodge of random information to base their investments on rather than any cohesive strategy.  The greatest danger in this is that, while most strategies work quite well on their own if implemented properly, they are usually quite disastrous when investors try to combine them together.    

The advice you've already received is a good example. Someone told you to research the stock... well that's great advice if you're a technical day trader or momentum investor and mostly concerned with trends and price action. It sounds like someone else told you to research the company... great advice if you're a growth or value investor. What if you're an index Investor? Then you wouldn't need to study the stock's price action or the company.  

There are many strategies to choose from, Jordan, and the best advice I can give you is to choose one investing strategy (ONLY ONE!) that interests you and that you feel is in line with your risk tolerance and investing goals and start studying. Only about 20% of professional money managers beat the average market return. That means it's tough to do, you really have to choose one strategy and work hard to master it.  

But before you can beat the market you have to choose your strategy... Here's a list of the 8 most popular strategies and a little blurb to give you an idea what they're about.

- Value Investing: “I won’t buy unless the stock is selling for less than it’s worth.”

- Growth Investing: “I’m willing to take some risks for portfolio growth.”

- Income Investing: “This money has to last a long time, I’m playing it safe.”

- Mutual Fund Investing: “I want professional expertise guiding my portfolio.”

- Index Investing (Index Funds and ETFs): “I’ll let the market do the work for me.”

- Momentum Investing: “I want to own hot stocks until they cool off.”

- Market Timing: “Ride the Bull and hide from the Bear.”

- Day Trading & Technical Analysis: “I have no fear of risk, I will take big chances for big gains.”

You can find a detailed strategy review of each at http://www.money-and-investing.com/Stock... if any of these sound interesting.

Best of luck to you, Jordan. Be sure to check back in on the boards now and then and tell us how you're doing.

Odd Lot

Answer 2

I use the following link to research stocks:

http://www.sogotrade.com/Research/Defaul...

This might be helpful to you.