What questions do you ask yourself before purchasing shares of a stock?

Question

I am trying to put together a group of questions to ask myself with investment decisons/ purchasing stocks.. I can think of the obvious questions but am interested in getting ideas because I am sure there are questions I have not thought of. Any and all ideas are welcome. Thanks in advance.

Answer 1

1. Performance of the company
2. EPS
3. Nature of business they have engaged
4. Management and their directors
5. Demand for their product
6. Percentage of their market
7. Comparing their competitor
8. Their performance in worst scenario
9. Availability of raw materials
10. Debit/ Credit policy of the company
11. Feature plan, expansion, equation, assets,

Answer 2

You should understand the main reason why you want to spend money buying a particular stock. This step should preclude investing in stock. It allows you to move swiftly as soon as the price of the stock goes down a lot. If you know the main motivation about purchasing a specific stock, you will not hesitate to buy it once the price falls. Stocks purchased on the spur of the moment can be sold as soon as the price goes down. But if you are buying it as undervalued stocks, you can buy more stocks. Hiring a stockbroker can benefit beginners to the stock investment as they give all the necessary information about the stock to make the buying decision easy.

Answer 3

Most important: How does it fit into my "asset allocation" & "risk tolorence"?

B. Do I understand what they do & how they make money?
C. What would be my exit stratedgy? (for going up or down).
D. I'd list my main fundemental reasons for entering (to use later...... if the stock no longer meets my original reasons for buying it.... I re-evaluate).
E. I'd look the charts for weekly & daily indications for the best entry.
F. If the stock is a "value" play I need to fully understand why it's selling so low.... and what's needed to turn it around.
G. If it's a growth play........ Why is it worth spending more than it's valued at?
H. What is my time line?
I. Am I over/under weighted in this industry?
J. Is this stock moving like the others in it's industry/category? (& why not????).
K. Are they making money?
L. Do they do something better/differently that make them a hard competitor to beat?

Repeat: If you don't have a plan to get out.... don't get in.

Answer 4

There are complicated approaches, and simple approaches. Both are profitable if applied consistently. Myself, as a professional fund manager, I ask:

First, I look for prolonged periods where the stock has done nothing at all. Then I ask,

Is the price of this stock going up? then it is a buy.

Is the price of this stock going down? then it is a sell.

Answer 5

I will ask my self 2 questions
1. Am I investing or
2. Am i speculating or betting

You should know your self better. Investing need a plan and it is long term
Speculating and making fast buck is based on rumors and hear say.

Most people thought they are investing but when they hear rumors about market crash they will sell off

If u are serious about investing study the company like Warren Buffet before buying their shares

Good Luck

Answer 6

The most obvious one is, will this stock continue to grow and prosper like it is at the present time? Is it worth taking the risk?

Answer 7

Are the fundamentals solid?
Do I like the company?
Does the company have a good reputation?
What are its prospects for growth?
In a worst case scenario, am I willing to lose all the money I'm investing?

Answer 8

General rule for stocks: If you've heard about it, it's too late.