Researching a Company
When considering what companies you’d like to invest in, be it in stocks or bonds, there are more important considerations than whether the price is right. Your broker’s advice on what to buy or sell will generally be helpful, but remember that he or she is making a commission off all the money you make as well as every trade you complete—take his or her advice with a grain of salt, and do some of the research yourself.
What to Look For
The most important trait of a company worth investing in is an increasing ROI. A rise in ROI is hard evidence of growth and success, and a growing, successful company is much more likely to be a good investment.
Of course, there are other factors which influence the value of stocks and bonds. Public perception of a company matters a great deal. Are the company’s brands recognizable? Does the company have a history of producing successful products and services? Don’t set your sights too high, though—the more successful a company is, the harder it often is to buy in.
Another indicator of a company’s worth when it comes to investing is its employees. Peruse executive profiles to get a feel for the people who will be making the decisions with your money. It’s hard to effectively measure the executives’ trustworthiness, but descriptions of how they’re paid can tell you a lot. For instance, look for companies where the executives are paid according to the company’s success. A personal stake like that is a powerful motivator, so they’re more likely to be taking great care in their decision-making, leading to a sounder investment on your part.
Where to Look
Yahoo! Finance’s Research Center - Yahoo! provides access to earnings reports, filings with the U.S. Securities and Exchange Commission, stock performance histories, and much more.
U.S. Securities and Exchange Commission (SEC) - The SEC is dedicated to protecting the American investor. Its website features a research system called EDGAR which catalogues all forms filed with the SEC as required by Federal law from any company trading on American markets, both foreign and domestic.
Reuters Stock Information - Reuters improves on the basic services offered by Yahoo! Finance by providing investors with risk analyses and continually updated lists of the hottest securities on the market. This site is useful for getting a feel for market activity.
