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Researching investments before you buy #finance

Researching investments can be difficult. The best way is to read all the annual reports of every company. That is a good idea if you are making a major investment but who has time to read them all?

Researching investments

Brokers

Brokers make recommendations but I find they often recommend shares far too late. They see an upward trend on their charts and so make a recommendation. While I don’t think we should dismiss information from brokers we should try to predict share movements from more reliable information.

Tipsters

Tipsters working for newspapers and investment magazines are probably less reliable  than brokers. They can sometimes make valid arguments and their warnings when there are negative indicators are useful. Again, there are more reliable sources of information.

The internet

The internet is great for doing research and I use Google Alerts on most of the companies I’m invested in or  am considering. Some of the bigger companies are fairly reliable and over the long-term will be a good investment. It is the riskier companies that require a lot of research especially on the AIM.

Politics and central banks

Political actions and the actions of central banks affect shares. Quantitative easing benefited the stock market and now we are seeing inflation rising that could benefit the market too. The Brexit vote trashed most share prices but they are recovering. That event was a great buying opportunity. I bought Taylor Wimpey because the yield from dividends was so high in comparison to the share price. The share price has soared by over 30% since I bought but the yield is still good when you take into account special dividends. The falling value of the pound also the affected share prices of exporters. GlaxoSmithKline soared as a result of the falling pound although  it has dropped back a little recently.

Solo Oil

The share price of Solo Oil has made gains this week as we wait to see of NT2 will strike gas and oil as NT1 did. The first section of the well has been drilled and now they go on to the second section which is about another kilometre. It isn’t advisable to put all your money into a company on the AIM. Obviously a big investment in Solo Oil could make you very rich but the cautious investor diversifies. If Solo comes good it will be a nice bonus and it won’t stop at NT2. The company intends raise more capital for the NT3 well. Who knows how successful these investments will be and how high the share price will go. Some people believe 6p is possible in the medium term.

Researching investments

Remember, researching investments yourself is the only way you can be sure that the information is reliable. Researching investments is complicated but there are lots of tools on the internet that you can use and lots of information out there to sift through.

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