How To Research and Analyze Stocks Before Investing

List: Posted: 12/10/10

Investing can be a tricky business, particularly in the current era of widespread market instability. This is seen most often in stocks that do not perform as a buyer had hoped. Such a situation, however, is usually avoidable through some pre-purchase analysis and research.

So, how can you analyze stocks? Thanks to the convenience of the Internet, it is quite easy to investigate all kinds of stocks and investment vehicles in order to determine if they are a good fit to the financial plan.

The selection of stocks begins with the individual establishing some general parameters. For example, a novice will want to study well-known and well-established firms simply because their stocks tend to be extremely easy to assess. The information that someone will need in order to assess their stocks includes “earnings per share” and the “price-earnings ratio” also called the P/E. These two things tell the investor the number of stocks that a company has outstanding and also how expensive a stock price might be in relation to actual earnings. These two factors make it clear which stocks are priced in a realistic manner and which might be a bit risky, or slow to perform.

Where can a buyer find this information about the stocks? They might head directly to a company’s website to see if they offer such details, or they can head to an actual stocks research website that regularly publishes the data. This might require the purchase of a subscription, but if someone wants to invest successfully then they will greatly benefit from the small extra expense.

Finally, online brokerages are great places for details about stocks, and can end up being a one-stop destination for investing.

Stock Exchanges

    Official site of The NASDAQ Stock Market featuring free stock quotes, stock exchange prices, stock market news, and online stock trading tools.

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