Researching your buy

When we are about to buy an electronic gadget like the latest camera, headphone or a laptop, we do such thorough analysis and research for days and weeks on the product, look for reviews on the Internet and ask around if the particular product is good before purchasing it. Why is it that when it comes to stocks, people buy on hearsay and through gut feeling without any thorough research in the company they are buying into?

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7 thoughts on “Researching your buy

  1. In my opinion, the difficultly and the vast amount of financial ratios deter people from looking into a company in-depth through research. They fear time spent in researching may turn out still be irrelevant as the ratios may be doctored or the ratios they use to gauge a company does not really reflect its actual financial health. They prefer to buy from hearsay as they assume others have done their homework? Just my two cents worth. :)

  2. Hi there financiallyfreenow,

    Personally, I think one reason people don’t do the research is because we do not understand the business in the first place. So if we research into it, chances are we’re not even sure what we’re looking for, or even if we find the information, we do not know how it affects our decision making process leaving us confused more than anything.

    This is unlike buying a handphone or a computer, when we normally know what we want, or expect it to do, what functions we’re looking for etc. Plus we have the store sales representatives to turn to for guidance into which products suit us best. In that respect, it would be better for beginning investors to learn all about investing into companies and the different types of companies by attending courses and reading the relevant books before actually putting any money down.

    By the way, I’m linking you to my blog. Perhaps you’ll be fine with a link exchange? My blog’s at http://therichkidwannabe.blogspot.com/ .

    Continue posting the good posts! =)

    Cheers,
    ~K

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