How I Invest, Part 6: Beware of Research

(Credit: Ivy Dawned via Flickr)

(Credit: Ivy Dawned via Flickr)

In previous entries I discussed the importance of researching a stock before you buy it. Research, of course, doesn’t stop when you purchase a stock. It’s an ongoing activity.

As the world changes, so does the stock market and so do individual stocks and the companies they represent. As an investor, it’s imperative that we know what’s going on in a company when it’s happening and assess how those activities are going to affect the stock price.

A golden boy stock of one year may be a huge failure the next. BlackBerry (BBRY) comes to mind. Once a favorite in my portfolio, today it’s still alive as a company, but just barely. I sold the stock I owned years ago.

First Solar (FSLR) is another example. It’s stock price was over a $160 a share in February 2011, then fell to as low as $15 in July 2012. Had I had a magic ball I might have realized that was the perfect time to buy again. I didn’t. Today, the stock is hovering around $70 a share.

So why is this blog titled “Beware of Research?”

Read More