One most likely wouldn’t buy a car, without first doing some research on their preferred model and its closest competitors. In the same vein one shouldn’t consider investing in shares without knowing something about the business, either. Research is a part of an investor’s due diligence. Whether they work with investment professionals or on their own, it’s wise to do their homework. The famous Benjamin Franklin once said, “An investment in knowledge pays the best interest.
Average investors can research and choose their shares and potentially do as well or even better than some of the professionals. They simply have to master the ins and out of the stock market first. Here are a few things one might want to consider as they begin this journey.
Owning shares is nothing more than owning pieces of various businesses. Businesses that issue shares are required to produce and publish financial reports, and those reports are where one should begin when deciding which shares to buy. A company’s annual report indicates the general state of the company at the end of the last fiscal year, and as a potential investor one should read them carefully and pay attention to details. But a lot can happen in the days between annual reports. If you’re considering investing in a company, you should check out the latest facts any way you can.
Researching about companies that you’re thinking of investing in can be overwhelming and intimidating when you’re new to the process. But researching stocks and investments isn’t as difficult as it seems at first glance when you understand how to read financial statements. Reading an annual report is the key to being able to value a company. With a little bit of practice, you can learn how to look at the numbers and see what appears to be going on within the company. Concepts such as accounting goodwill, depreciation, and diluted shares outstanding will begin to make sense.
Many companies hold investor and analysts briefings after they report their earnings each quarter. One or two of the senior executives go through the results and explain what happened (with a hefty dose of positive spin), and then take questions. In most cases, it is only analysts and institutional investors invited by the companies who can ask questions, but anyone can listen. Companies usually announce these briefings on their websites and may also post recordings on their websites.
Analysts briefings are a great sources of information about where the business is headed. The questions asked by the media, other shareholders or capital markets intermediaries and the answers provided can give one a good sense of what concerns experienced analysts have about the financial results and the prospects for the future. Those answering the questions may be candid or evasive but the information they give can help prospective shareholders track the progress of the business, or find out where it’s headed.
To invest in shares on companies listed on the Zimbabwe Stock Exchange and the Financial Securities Exchange one can simply visit www.ctrade.co.zw to register to buy and sell shares anytime, anywhere.
NOTE: Please consult with a financial advisor for investment advice and answers to any specific questions you might have. The information contained in this article is not intended as a substitute for investment advice.