If you’ve found a stock that appeals to you, an important fact-checking task is to start scouring the web for any new developments or contrary opinions that could poke holes in your investment thesis based on recent news.
After all, BP (NYSE:BP) seemed like a decent investment before the Deepwater Horizon disaster. If you didn’t notice the oil spill, however, you would have been very foolish to buy in as shares fell fast.
Start by doing a simple news search at Google.com/news. Type in the company’s name, and some of its most important products to see what’s going on. You also can type in the company’s stock ticker symbol to get information from financial sites — an important tip when researching consumer-oriented stocks like Wal-Mart (NYSE:WMT) or McDonald’s (NYSE:MCD) that frequently pop up in headlines that have little to do with “investable” information.
Next, go to Google.com/finance and insert the ticker symbol to get a report on the specific stock you’re interested in. On the company’s page, look at the most recent headlines displayed next to the stock chart and see if anything is up. Follow that up with a visit to Yahoo.com/finance and do the same thing — insert the ticker symbol for the company you’re after, then view the news that is displayed under the financial data. For more news, click on “headlines” in the left rail under “news & info.”
What did you find in these headlines? Anything that scares you off? Anything that makes you even more optimistic? Were you able to “source” some of your reasons for buying, whether it be confirmation of a product release date or verification of profit numbers?
Here’s where your own critical thinking is going to be put to the test.
The good news is that several checklist items are left, so you don’t have to make an all-or-nothing call right now. Simply being aware of the news — especially breaking news — is crucial to validating your feelings on your prospective investment. From product recalls to natural disasters to geopolitical unrest, news reports go a long way toward helping you understand the risks and potential of a given company.
You can’t tell the future. But what you can do is make sure your investment decisions are made with the very latest information, and not news that is stale or untrustworthy.
Check out a complete list of Investing 101 articles by Jeff Reeves for more on learning how to invest and pick stocks.
Also, for just 99 cents you can download Jeff’s e-book “The Frugal Investor’s Guide to Finding Great Stocks: 11 Free Resources to Help Beginners Identify Fantastic Investments.”
You can also buy a printed copy of “The Frugal Investor’s Guide” for $15.10 via online publisher Lulu.