Be Aware of Ineffective Investment Analysis Tools

Most people wanting to invest their money into the stock market decide to do so on the basis of a handful of investment analysis tools available to them. However, you must do your homework before investing. It is crucial to do a complete and thorough analysis of any investment opportunity before investing. Be aware of poor investment tools and do your own research.

Reliance on Past Performance Metrics


A lot of investors choose to study the past performance of stocks to gauge how the stock will perform in the future. While past performance certainly gives investors insight to stock trends, key company decisions will affect the stock as well. Making decisions on past performance alone, is not a sound investment strategy.

Blind Trust in Software Based Tools


There are a number of new stock analysis software tools available in the market for the sole purpose of investment trading. The main purpose of all these programs is to provide you information quickly. If you want to make an investment in the stock market, then you have to be able to make quick decisions, and know the exact time to get in, and, get out. Although these IT based programs are very helpful in delivering proper and quick information, at the end of the day the person making the investment has to know what he is doing. The person trading the stock should be knowledgeable and up to date on company and market data.

‘Hot Tip’ Investment

Be extremely wary of investment based on hot tips that you find on websites, investment forums and emails. These tip are not likely to offer special values to investor. The tips are meant to drive up the value of the stock, the only people who will benefit from tips are people who have already invested in the stock.

Reliance Solely on News & Company Updates

An amateur investor receives significant updated news regarding stocks after the stock gains are extracted. The window of opportunity to ride the wave of stock price adjustment, according to significant news, is extremely short. Traders on the floor are likely to either receive the news before it goes public, or extract major gains by the time you may see it. Reliance on this tool alone is not likely to help you plan a good investment strategy.

blog comments powered by Disqus
Scottrade