Learn To Do Your Own Investment Research
There’s no better way to stay on the right investing path than to do things yourself. That way you have control over your own finances. And not only will you learn a lot and be able to make your own investment decisions, but you’ll save thousands of dollars over the years in fees and advisory expenses. Here we’ll cover how to get started on the right path to doing your own investment research.
First, it’s important to know that, during the late 1990s, fair disclosure laws were passed that meant companies could not release any information to investors unless it was to all investors and at the same time. At the time, stock analysts would get better information from company management than individual investments. With the new laws it meant that any substantial information that was disclosed to one person or investor, had to be disclosed to everyone. Since then, all important news for public companies has been reported through press releases and over conference calls. All conference calls are now made available to individual investors and can be listened to live or after the call has been completed. The great news here is that with this information, you can be as well informed about a company as most of Wall Street.
If you’re a beginning investor, the best way to get started is to become hungry for information. Visit investing websites and read about the economy and investing articles. Consider buying a book about investing to help a little more. Go to sites like Yahoo and Google Finance and make portfolios with stocks and market indices that you are interested in. When news articles are released, read them all to learn more about the companies you’re interested in. Subscribe to magazines such as Money magazine, SmartMoney, Kiplingers and maybe Forbes. All of these magazines can be purchased at severe discounts or with airline miles. Get an online subscription to the Wall Street Journal if you have time to read even more. Also, make a point to watch a few investing shows per week to hear what the experts are talking about and to stay in touch with current news. Although we don’t like Mad Money because Jim Cramer is more like Simon on American Idol than he is an investor, we like shows like Fast Money on CNBC, where several experts debate current headlines and news each night. The real key in doing all of this is for you to get a good understanding of the overall stock market, economy and stocks, and to see how they all fit together.
While you continue reading and learning, start to do your own investment research. To get started, you need to learn the basic valuation and financial metrics that are used to measure stocks. Simple terms like price to earnings ratio (PE), earnings per share (EPS) and price earnings to growth rate (PEG) are some good terms to start with. Visit Yahoo or Google Finance and look at all of the financial information, analyst estimates, growth forecasts, and any research reports that you can get through your broker for free (etrade provides these for clients). Try to become familiar and get a basic understanding of the valuation metrics so that you can start to compare different companies based on these metrics.
The next step is to get a little more hardcore and learn how to determine which stocks have better valuations, growth prospects, and really learn how to do your own research. Look for future articles from us on some of the specific valuation methods.
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