What should I know about a company before I buy shares?
I'm a software engineer. I want to buy shares of a company. How should I select a company to buy shares in?
What do I need to know about the company first? How many shares should I invest and what should the cost per share be?
Tough question and no single answer possible, even though I had sold and bought few companies. If you are a novice, please look for experience good consultant as you need a lot of analysis ranging from analyse yourself, the company, the management team, the market, and many necessary information as deemed fit.
Why I said so? Instead of trying to save some money by not engaging a consultant, you lost your investment amount (which is much worst).
If you investment include you also involve in running the business, than your investment considerations include your passion and relationship which you are advise to get an expert 3rd party advise.
Thus I am not quite convince you can get good answer in this platform.
Follow the company revenue information, wall street updates. Sometimes the small company's business which is rapidly growing may be expensive than the big company with slow growth but consistent. Check for such information.Dont just go with recommendations blindly.
Also buying expensive stocks are also not a bad idea as long you know when to sell.
Yes it is necessary to know the standing of the company in the financial world.Experts suggests that one should do extra spade work in finding out the previous years results,and this can be done by reading company profit and loss account,balance sheet etc.
How many shares should I invest and what should the cost per share be?
That would depend upon the first question that you asked
Here are some of the questions you should ask before investing in shares
1. What does the company do and is it profitable?
2. Past Company's earning history - You can browse online to find these documentations.
3. Who runs the company and who are its competitors?
4. Does the company have a clean balance sheet?
5. Have you researched the company's financial reports for the past 2 years?
These are some of the key questions for which you need to get answers for before you decide to invest in a company's shares.
You would need to perform a due diligence over the company. Review financial information to uderstand its growth since its incorporation and the articles of incorporation and corporate by-laws to understand your rights and obligations in connection therewith.
Look for a pattern of value increase that seems as steady as your anxiety level allows. The sharper the spike upward the more likely you'll be in for a fear fest.