Why do you like to buy stocks? Do you know? Ok, Well, I can suggest some of the good reasons for buying stocks.
• Some buy particularly following a chart or a trend.
• Some buy simply by reading an interesting article on available stocks in market.
• Some buys on recommendation from expert.
All the reasons stated above are good at different occasions, however, with this article you are going to get a checklist on how to buy a stock. At the same time, this will reduce the lame reasons for buying stocks and help you in making more money.
For those who are eager to buy stocks we are providing a 6-point checklist to help them make right decisions. This is a kind of self-assessment for stock buyers.
Checklist 1: Does Your Stock Pass The Test Of Possessing A Company Vs. Possessing A Stock? Have you been offered a stake in your friend’s company? Would you like to purchase an ownership stake? Do you know when you buy a stock of a particular company; you are actually purchasing the ownership of a company.
Now, how would you research on the particular company, which you think of becoming an owner? You have to do research on the management, products, services, and their capital structure. The similar thing you need to do with your stock.
Checklist 2: Are You Able To Understand The Services And Products That The Particularly Thinks Top Sale?
If you ask me about bank, better to say I do not understand a single thing about it. Whatever it maybe – derivatives, securities, Blah! Blah!
I like to switch on to a company, which I know better, like Apple. I think not only me most of you use their products, and ask me I think, we all are a kind of indirect salesman of Apple. I always ask my dear friends to go for the latest Apple products. Like the way I understand Apple and their company, try to know the company whose stocks you prefer to buy.
Checklist 3: Do You Know About The Financial State Of The Company You Like To Invest Up On?
First, try to learn how to read a balance sheet and income statement, analyze them for the company, whose stocks you prefer to buy. Do make sure whether the company is in debts or not. Is the company able to finance their growth through cash flow?
Checklist 4: Is The Company Poised To Surpass Others?
The company on which you think to invest is surely going to have a great market share, but if you go for the whole market, then their performance is going to shrink. So get a good hold of your steering.
Checklist 5: Is The Company Global Or A Domestic One?
Do you know who the customers for the concerned company are? If they are limited only to the American companies, then reconsider their economic conditions domestically. Prefer those companies who sale their product and services globally.
Checklist 6: Do You Have Any Kind Of Exit Strategy?
Yes, often you do not have a proper exit plan and hence the profits on paper become meaningless. Are you having a targeted share price, which you want to reach before selling all you position? If you see that, you have reached the target share price, then stick to the earlier plan and cash it out from the present position.
Checklists are just a guide to make you stick to the right path, when you think to invest. So, make your decisions based on it.
Berry Stone is a financial expert and loves to invest in company stocks. He himself is a stock specialist and his advices are priceless. He is also lending financial advices to a renowned contact center, which leverages inbound call center services to various small and mid-sized businesses.