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How to Research Stocks

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Think of a situation in which you decided to buy a car. You would never go blindly into buying some products such as car without previously researching the features of that car, what model you prefer, competitions from other car manufacturers, available prizes and many other things. The same thing can be applied to buying stocks. You should never buy stock without first researching those stocks. Otherwise, you might end up with the unwanted results of that purchase. This article will provide several guiding points that might help a potential stock buyer in regards to how he or she should conduct the research and on what issues to pay special attention.

Look Through the Company's Annual Report

Even before you buy a car you would always research the make and model of that car to see what are the advantages and disadvantage of that model of the car. That logic and research approach must also be applied when deciding to buy stock from some company. Before you actually buy the stock make sure that you have research everything that might influence your decision. The first step in that process is actually to look through the annual report of the company whose stock you are buying. With some basic instructions you will be able to understand what the number in that report means and you will be able to see whether or not the given company has had success in the last year and whether or not it pays off to buy the stocks of that company. Reading through the annual report you will be able to see what the report says about the depreciation, accounting goodwill, diluted shares, and many other important aspects and using that information you will be able to determine what your next move is.

Use the Right Research Platform

One of the most useful instruments that beginners might use in order to research the stocks and the stock markets is the research platform. This platform will provide you with huge amount of information that include quotes for individual stocks, financial statements of certain companies, statistics of certain company and many other important aspects that might be useful for a beginner. One of such research platform is Fidelity.com that will enable the person to access the information about many aspects including mutuals funds, bonds, options, annuities, ETFs (exchange-traded funds) as well as sectors and industries and many other.

Read the News

newspaperIn order to stay up to date with all the information that is relevant for buying or selling the stocks a person will have to put some effort also into reading or watching news that deal with the given topic. Imagine a situation in which you already decided to buy stocks of some company and you actually go through with that and you buy those stocks for a certain amount of money only to wake up next morning hearing about some scandals that the company whose stocks you bought participated in and consequently the prize of those stocks plummeted down and you will lose a lot of money. That might not have happed if you have read or watched the news that talked about that company and the scandal and in that way you will not to buy the stock of that company.

Practice Makes Perfect

In order not to lose a lot of money by buying stocks of certain company before you had conducted a research you might want to make several practice purchases. There are several practicing programs that are available for everybody who wants to see whether he is ready for purchasing stocks and participate in the stock market. Wealth-Lab Pro (available at Fidelity.com) is one such program will provide you with the opportunity to practice buying and selling stock. However, most importantly it will provide you with the opportunity to check whether or not you have conducted the research about stocks of certain company good or you will have to go back to the research and spend more time researching the stocks and the certain company's numbers.

The appropriate research is very important for all aspects of conducting business. However, it is crucially important for buying and selling stocks because without proper research and without having a complete and accurate information and data about the company whose stocks you are buying you might end up losing a lot of money.