Investing in the stock market is gaining popularity among the newer generations. More and more people realize the potential of investing and how it can affect their financial situation. With this realization, those that want to become serious investors, whether to generate a passive income or be involved with more active investments, need to understand the ins and outs of the research that goes into investing.
There is no single strategy that everyone can use in their investing journey. Instead, you need to establish your own financial goals and motivations to develop the ideal method. However, there are a few tips that every seasoned investor can keep in mind regardless of their strategies or goals. Today, we’ll cover three keys to advanced stock market research to help make your investment decisions easier and more beneficial.
1. Utilize stock screeners to sort through stocks to find the best for you.
There are plenty of stock screening resources available online. These stock screeners allow users to sort stocks and exchange-traded funds (ETFs) by various categories, such as most profitable stocks, stocks by market cap, and many more. This way, you can find the stock that suits your strategy without combing through listings and compiling lists yourself. As a result, you can save endless hours of research and develop your plan with ease.
Although many of these resources are paid websites or software, there are some free screeners that offer all of these resources without spending a dime, and when you’re investing, every penny counts. One of today’s top stock screeners and stock market resources online is financecharts.com. FinanceCharts a myriad of selections to sort through stocks quickly and efficiently. When you take advantage of a 100 percent free resource like this one, you’re already a step ahead.
2. Use qualitative research over quantitative research.
Not to say that quantitative research has no place in stocks, because it does, but you need to include qualitative research as well. Quantitative research shows you the straightforward financials of a company. However, qualitative research gives you the details of a company to establish a more authentic picture of its operations. As Warren Buffett said about stocks, “Buy into a company because you want to own it, not because you want the stock to go up.”
When you purchase a stock, you’re buying a personal connection to a business. Therefore, you need to understand how the company makes money. Are they a retailer? A food service company? Or do they work in transportation? No matter what the company does, you need to know what their business is so you can decide whether it’s a common-sense business that can last for more than a few years. Likewise, you should have an idea of their management team. A company can only succeed with quality leaders in the organization. So, during your research, ensure you understand more about the company than how much its shares are worth.
3. Put your research into context.
There are countless metrics and ratios serious investors can use to assess a company’s financial health and the long-term value of its stock. However, researching a company’s revenue from a single year or the company’s most recent business decisions doesn’t give you the complete picture. Before you purchase stock in a company, you need the full narrative about that company and what factors make it a profitable long-term partnership. To assess these factors, you need to put your research into context.
To put your research into context, you need to check out a business’s historical data. Historical data provides the insight you need into the company’s resilience in the face of adversity and how they function in times of success. Moreover, you should compare the numbers and ratios of your potential investment with other companies that operate in the same industry to see if they’re near the top of their field. The easiest way to put your research into context is by using the stock screener tool we mentioned earlier.
Start making smarter investments.
You can make smarter investments to hit your financial goals with these three tips. Remember to use stock screeners like FinanceCharts, utilize qualitative research, and put that research into context.
