In my article titled Typical Stock Investor Mistakes, I emphasized the importance of research in making the right decision in selecting the right stock investment. Giving time in research and analysis are worthwhile even if its time consuming because it is vital importance to know how to analyze the data being presented.
There are two major schools of analysis or research in stocks or any financial markets and these are technical analysis and fundamental analysis. Technical analysis is the study of price movement, which can be studied more effectively if we look at charts and other indicators to predict price. Fundamental analysis help us understand how to analyze all the data being presented in several reports. Both schools of analysis seem like a daunting task for a beginner because of all the numbers and financial information that are present. But in our next articles we will try to teach them the best way we would.
Meanwhile, let’s look at the list below that shows the important steps in doing an effective market research.
- Company website/other financial websites
The company website of any other financial websites like google finance, yahoo finance, Bloomberg, Reuters, and etc. who a general information about the company. It is important for you to have a general knowledge of the company. The description of the company, their address, website, email, CEO, number of employees, Sector, industry are usually present in these websites.
Another thing that you should be doing is getting updated about the most recent news about the company to know what is going on. It is essential to be aware of all the important changes and business decisions happening in the company. Websites like google finance, yahoo finance, Bloomberg, Reuters, give information about these as well but you can also check media companies such as BBC, CNBC, and many others for this information.
After you opened an account with a broker, free or live account they usually allow you to access their charting tools. However, websites like investing.com or trading view give you these tools as well so make sure to check them out. Charts are good and easy to understand source of information once you get used to it. Usually charts allow you to see monthly, weekly, daily, minute and a variety of other charts.
Downloading the financial statements and analyzing them is the next step. You have to check out the company’s balance sheets, income statements and cash flow because these financial information will help you evaluate the company’s performance and estimate its value. It will give you an idea how profitable the company is and how will it do in the long-run.