The Thriving Artist by David Maurice Sharp

Author:David Maurice Sharp
Language: eng
Format: epub
ISBN: 9781317611417
Publisher: Focal Press

CHAPTER 19

Stock Analysis: The Dreaded Data

Now that you’ve found some potential companies to invest in, how do you decide whether you should invest or not? There is not a single tried and true method for determining which shares will do well, or else everyone would be following it and everyone would be independently wealthy. There are many schools of thought on what data is best to analyze and what information about the analysis could indicate that you should buy a stock. It is a good idea to familiarize yourself with the data that you will be looking at so that you can start to determine for yourself what would help you decide to buy shares of a company. I like to keep a spreadsheet of data on stocks that I am tracking so that I can see trends that are happening in its data. Sometimes I will follow the stock’s data a long time before I buy it and sometimes just for a short time. But I always do look at the data. I also always compare the company that I am interested in to other companies in its sector and industry. Recall from Chapter 15 the importance of always comparing similar companies, as the data can be quite different for companies in unrelated industries. Comparing an electric utility company’s data to that of a high-tech company’s data is not going to be meaningful or helpful in making your decisions.

There are numerous online sites where you can find information on companies that are potential investments for you, including most brokers’ websites. Yahoo Finance, for example, is one that I frequently use. Once you find a site that you like and one that gives you the information you need, try sticking with that site. It will make the task of looking up data a little easier because you will know how to get to the information quickly on that particular site.

One of the first things I look at for a new company that I am researching is the company profile. This will give you the sector and industry that the company is classified in and other valuable information. For example, the company profile will provide you with a brief description of the company’s business, which will let you know what they do as well as give you an idea of whether they are keeping up with the trends within their industry. You will also want to look at how long they have been in business and who the key executives are. Have the executives been running the company for a long time or are they relatively new? If there has been a recent change in management is it because the company is moving in a different direction? Or is it perhaps due to a negative event that caused the former executives to leave? An interesting area to jump to from the company profile is the insiders data. This data section will show the number of shares that directors and officers of the company own and any share-trading transactions in which they have recently engaged.

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