When preparing to choose stocks in which to invest, investors will perform a great deal of stock research to help them determine whether a particular stock may be a sound investment. There are several methods of stock research and different investors prefer one method or another for various reasons, but stock research is done to answer one pivotal question as accurately as possible: will the price of this stock go up?


Theories of Stock Research

Generally there are two differing schools of thought when it comes to stock research. These are the technical approach and the fundamental approach. Technical stock research looks first and foremost at a stock?s performance over time. By analyzing the trends of a particular stock?s price to rise and fall over time, the investor makes the assumption that the stock will continue to perform in a similar manner. Making stock purchases based on past trends is both speculative and assumptive, but the process works for many people and is considered a generally wise way to invest. Fundamental stock research instead looks at the particulars of the company itself. Annual reports are studied as are details like changes in the company?s board of directors, new products being brought to market, and a host of other facts. Investors who subscribe to this method of stock research believe that it gives them insight into the company in which they?re putting their money and believe that there is more to stock performance than past trends.

Some form of stock research can be vital when an investor is making a decision regarding which stock will give her the best results. It?s important to remember that there can be a fine line between legal research and illegal insider trading. Using information from public sources such as the newspaper, financial reports, the internet, and such is stock research. Having a brother in law who works for the company in question warn you that the corporation may be going bankrupt is trading on insider information and can be punishable by fines and imprisonment. Just ask Martha Stewart.

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