How to make informed investment decisions
Are you an informed investor? If you want to make the most of the opportunities out there, you need to be. Sure, it’s possible to play it safe on relatively little information as long as you stick with low-risk assets; it’s also possible to invest based on instinct, but such instincts take years, even decades to refine. It’s really only by doing your research that you’ll be able to maximize the potential of your money. To put it bluntly, most of the time you will get what you work for. The tricky question for newcomers is how should that work be carried out?
The news
Every successful investor pays attention to the news. If you want to predict the behavior of the national economy– which is essential to making predictions even at a small scale, local level – then you have to know what’s going on in domestic politics and international affairs, how tax priorities and business regulations might change over the next few years and whether or not wars or natural disasters are likely to influence the way money moves. All sorts of events can impact on investment, and this is increasingly the case as you narrow your focus, looking at local papers from where the businesses you’re interested in are based, and looking at trade journals that give you the lowdown on particular sectors. Of course, other investors have access to all this information too, so it won’t give you a huge advantage, but it’s not something you can afford to ignore.
The internet
You may not think of the internet as a very reliable source, but it contains all sorts of useful information once you’ve figured out how to evaluate it and weigh up its trustworthiness. A good place to start is with company websites. They often contain useful information about the individuals involved, and you can then use platforms like LinkedIn, Twitter or even Facebook to research those individuals and learn more about them, helping you to assess the potential of a company based on the strengths and weaknesses of the people running it.
The SEC
For a more formal perspective on a company, and a guarantee that you’re getting the whole picture, the US Securities and Exchange Commission(SEC) is your friend. You can use it to find information on almost any company registered in the US, including financial reports, details of insider trading arrangements, information on the involvement of hedge funds and even things like company press releases. It’s especially useful for helping you to map out a sector to see how different businesses within it interact with one another. When it comes to international investments, you’ll find that most other countries have a similar body, such as Companies House in the UK.
Research platforms
To simplify your research, you may choose to go to one of a number of online specialists focused on collecting and collating information about companies. The plus side of that is that it can save you a lot of time; the downside is that you may have to pay for premium access and you’re less likely to uncover those overlooked scraps of information that can give you a real edge over your competitors. Research platforms are most useful when you’ve already put in the hard work to find out about a company’s background and your main priority is now keeping track of its share price and being alerted to any significant details such as the formation of new partnerships or the appointment of new directors.
Artificial intelligence
Another way to ensure that you stay up to date on company activities while minimizing the effort involved is to use artificial intelligence. AI is becoming increasingly sophisticated in keeping track of prices and it can even make buying decisions based on your assigned priorities. It’s also getting better and better at analyzing disparate aspects of company and market data to predict how prices will develop. The downside is that it does require upfront investment and you’ll have to keep it up to date because otherwise you’ll be quite unable to compete effectively against rival investors who do.
Consult a professional
When you’re first finding your feet as an investor or when you’re faced with particularly tricky decisions, it’s often worth bringing in a professional. Sudir Raju is the Managing Director of ETP Relationships and a specialist in investment analysis. He’s worked in global information management for almost a decade. That kind of professional expertise is something that even the most advanced AI can’t yet match, and although professionals obviously need to be paid, the advice they can provide will often increase your profits sufficiently to pay for itself very quickly. After that, it’s all profit.
Investing inevitably involves an element of risk, but if you’re diligent about your research and ensure you stay on top of changing information, the odds of you being successful will soar.