How to Do Stock Market Research

Daniel Penzing
Written by
Last update:

If you want to invest in the stock market, you need to do some research first.

There are many different stock market types that you can buy stocks from. You can choose to do simple research on the stocks you want to buy or you can choose a more in-depth method to understand their futures and opportunities.

If you want to invest in stocks, you must first know what you want to buy and how much you can spend. You can visit most investment sites and check out the stocks that are available. You can also search online for different stocks to invest in.

There are several different websites online that offer free information and advice on the stock market. Or you can talk to someone in the investment field, who can help you decide which stock you want to buy. Most sites will offer plenty of advice, and it is best to ask questions when deciding what to invest in.

The stock market is a lot like a gamble, there are many different things that can happen. So if you are planning to get involved in the stock market, as a beginner, it is best to start out as small as possible.

Set a range of stocks that you are willing to spend for and stick to that limit. If you are not happy with the results, you can always invest more money, and have a larger portfolio of stocks.

You should always do some research before you make any investments. Thankfully, today, there is plenty of free advice and information available to help you get started.

How to Find Information About a Company

The first place that you will probably look for information is the company website. If you know the company, you can look on the website for the information that you need. However, they usually put the most basic or flattering information that they can find there. If there is information that they do not want prospective investors to know, they often put that information on the website; sometimes however, there will be many links and it is hard to find what the company wants to keep you from knowing.

Another place to look is on the SEC (Securities and Exchange Commission) website. Most companies are required to file reports with the SEC, detailing information about the company’s financial situation. They also have to file all information that was given to the public about new products or new services. This information is also on the company’s website, usually in the form of an investor’s report, but the SEC verifies the information and can give you an unbiased source.

Another source of information is a financial analyst. The best advice is to use them as a guide and a way to cross-check and verify information that you find. They are not likely to go against the company that they work for. However, do not depend on just one source of information; make sure that you read several sources and try to find one that is not connected to the company.

Understand the Company Behind the Stock

One of the most important things that you can do when researching a company is to look at the company itself. Start by looking at their products and services. What is the market like for that type of service? What solutions does this company offer to improve the market? Are there any issues that this company is facing that could be a potential short term issue? What are their long term goals?

Once you have a good idea of the company, look at the stock. First, what is the stock currently trading at? What is the trend? How is it performing in comparison to its competitors?

You also want to look at where the stock currently sits. This is important because it can give you an idea of where you should buy the stock. If the stock has a lot of room for growth, wait until it gets to a level where it’s between a resistance and a support level. Or if the stock is at an all time high, you may benefit from it going back down.

Other areas to look at are how many shares are currently being traded as well as the overall market cap.

Find What's Knowable

If you want to make money when you do stock market research, find out what’s currently knowable within the current market. You may think you can predict the future, but even the best economists can’t predict the future with 100% accuracy.

It is an important part of your research to find out how accurate the experts’ predictions are, so see how much accuracy they have. If the experts’ predictions are 99% accurate, that is a good middle ground for newcomers to the market. You can also look at companies’ plans for the future, and see what their earnings are predicted to be at this point in time.

Learn to find out what is currently knowable at this point in the market. There will always be new data to find and analyze, and it is one of the advantages that you have over the big traders.

Dig Deep and Keep Asking Questions

Shopping for stocks is much more about the answers you ask yourself than the answers you get at the library or from the financial experts on television. No matter how much you spend researching, no one ever pushes you to think about the hardest question of all: is this stock right for me?

There's an especially difficult question to answer when you're looking at specific stocks: "Did I buy the right one?" There are so many questions to consider: Should you have bought it at the current price? Is this you? Will it make money for you? Can it be a springboard to other investments? Did the market go up a lot or down a lot? Is your portfolio even better off than it was before you bought the stock? Is the industry doing well? Did you sell? Did you re-balance your portfolio?

Because of the odd situations life throws our way, you might be hesitant to stick down one answer or another, and there are enough very valid reasons to go in either or both directions. But, overall, you need to buy more stocks that are right for you and not buy stocks that are wrong for you.

Still, this might not be an easy, step by step process. You need to use your instincts, if for no other reason than there may be times where you don't have time to dig and ask all the questions and that just doesn't seem right.