In today’s blog post, I am going to cover how to analyze investments as a beginner. In general, investing is easy and only requires little research when it comes to decision making. If you find this post helpful then consider sending it to a friend that could also benefit.
Figuring It Out
The basics of investment analysis requires you asking the question of “how will this benefit me long term?” and “is this an opportunity?”. Let’s start with age. Being a young person that wants to learn and become an active investor has such a huge advantage over others that are starting later.
The first thing that needs to be done when analyzing investments is
Can I invest Constantly
Putting only $100 into the stock market and never adding more to your portfolio won’t benefit you at all! I have talk to people that thought that $100 can turn into $100,000 if you keep it in that one stock and never look/sell it. It’s just not true! The stock can completely drop and you’ll be out -$100 just like that. Now of course your single investment 10Xing its self could happen, but in general it doesn’t.
That is why you must look and ask if you can always be investing money every week or month to grow that nest egg. Now with investing periodically, I suggest that money is put into a ETF, REIT, and dividend stock. Your portfolio will grow and receive passive income which can be reinvested to further grow the savings.
Analysing What Stock To Buy (Extreme)
Below is a response on reddit on how to go about research a stock before buying.
-Go to Finviz, search for names that have the market cap that you like, the fundamentals that you like
– go to Wikipedia, read the story behind the company, go to their site, read what they do, go to social media, watch how engagement they attract with their posts.
-Then go to Seeking Alpha, read the latest “analysis” about the company
-Then go to SEC site, read the 10-k and 10-q, use the search function for words that usually are avoided at all costs in these reports.
-Then go to dataroma and watch how many hedge funds are holding the company, if they are reducing or increasing
-Try to figure what are the business risks for the company
-Then go to gurufocus and churn the numbers there, to see if the story that the numbers are telling make any sense, if there are discrepancies, watch why are there discrepancies.
-Then ask yourself what do you know that the market doesn’t, i.e. where is your alpha?
-Watch if the price you are paying is inferior to the value that you are getting
Click here to read another in depth cheat sheet to picking stocks before investing in them.
Analysing What Stock To Buy (Simple)
The simple way to analyze investments as a beginner is by searching what other websites are suggesting, Reddit, Robinhood’s analysis (when you buy stocks on the platform they sometimes have information on if its a buy, hold, or sell) , Finviz.com, Youtube videos, etc.
- Make sure that you invest money consistently
- Diversity your portfolio
- Read articles, Reddit post, and YT videos about stocks people are buying
- Do more of your own research by visiting Finviz.com (barley learned about this website today)
- I think that last step is to set investing goals so that it becomes a habit and accomplishing those goals will feel amazing
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