Research, research, research. At the end of the day that’s what it’s all about. Any investor worth their salt will tell you the same.
Due diligence is how you don’t get caught out, you have to look behind the facade, uncover the facts and make well-reasoned decisions based on your findings.
You can conduct due diligence on any stock using readily available public information. Just a quick search will give you reams of research, now you just have to take the time (and enough coffee) to go through it all.
You want to look at the company’s numbers, and compare these numbers over time, as well as compare them to their competitors’ equivalents. You’ll want to check the management team and share ownership, stock price history, and consider the risks, as well as many other things
The same due diligence strategy will usually work on a variety of investments and stock names, but you may also want to focus on company specifics (have there been any scandals or mismanagement?), and sector specifics (are there any legal changes in the pipeline?).
Some key questions you should ask yourself in the due diligence process are:
- How can I lose money with this investment?
- How will this investment help me achieve my objectives, both personal and within my portfolio?
- What is my exit strategy?
- How does this investment make business sense, i.e. what is my return on investment?
- How does this investment affect the risk profile of my portfolio?
Each investment idea will give different answers, and each investor has different risk appetites, so will draw different conclusions from the information uncovered. It’s about what works for you, and for your goals.
Well, this all sounds very time-consuming… and luckily Upside can help!
The Upside app takes a three-pillar approach, with two out of the three pillars being transparent funds that are built and managed in-house, giving you the time just to focus on the last pillar: single stocks. But don't worry! We're here to help with these too. You'll find all the information you need to take that next step to invest in single stocks within the app, and helpful jargon free education snippets to get you on the right path.
Here at Upside, we understand the importance of covering your bases and know there is a science to being right.
