“To make money in the stock market, you must buy low and sell high.” This is an old saying amongst stock brokers and investors. But in order to do this you must be able to ascertain which stocks are likely to give you such leverage. Before you go ahead and bet your money on some stocks, ensure that your stock earnings have the potential to accelerate. Certain preliminary steps are a must for you to be able to know the basics of stock market.
Smart investing entails a calm and composed buying and selling plan. Measured risk-taking, and not an impulsive or hasty decision, will take you to that end. It is very important to do a stock review prior to investing by researching as much as you can about the company whose stocks you want to buy. Some of the sources where you can obtain basic information about companies are:
Annual Reports: Annual reports of companies can be obtained from brokers, the company’s financial department or the company’s website.
Reports by Analysts: Many brokerages provide financial information about companies. The analysts’ report can generally be obtained on request.
Media: Following the financial news about companies on channels like NDTV Profit, CNBC-TV18 etc. can be beneficial. Financial dailies and magazines such as Business Standard and Capital Market are also reliable sources of information about stocks and investment markets. Spend at least one or two weeks reading about the company, instead of judging on the basis of one issue alone.
Internet: The internet can open up many investment sites for you. You can also view companies’ websites and financial data on the net. But do check out the reputation of the sites offering investment opportunities, lest you fall into the trap of an offer without substance.
Do not go by the mere price of the stock. Just because its cheap does not mean that its stock earnings will be high. Consider the value of the stock first. Buying a few shares of a high-priced stock with good earnings potential is better than buying many shares of a low-priced stock with poor earnings potential. Such steps will enable to sift the worthless stock from a valuable one.