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While there may well be other factors worthy of consideration, here are
Some Factors To Consider When Investing
1. Preferences : Is this a stock that adequately represents your personal values? Would you feel comfortable owning this stock because of the type of industry it represents. Do you feel good enough about this investment that you will have no regrets about having invested in it even if it loses money?
2. Financial Goals : What is your growth goal over the next month/year/decade? Be absolutely specific about the quantitative nature of your goals. How fast do you desire to multiply your money...for example, 10%, 20%, 200%, 400% per year? Is the stock growing at a high enough rate to meet or exceed these goals?
3. Fundamentals : Has this stock performed well in the past? Are there sound reasons for believing that this stock will continue to perform as it has in the past or better than it has in the past? Is the company behind the stock built on a strong foundation? Is there a strong management team? Is there diversity in the demand experienced by the company? Is the stock firmly rooted in a growth sector of the economy? Is the sector of the economy in which the stock is based growing at a high enough rate to meet or exceed your financial goals?
4. Volatility : Are you likely to be able to tolerate the swings in this particular stock, especially the downswings? Would you feel comfortable with the degree of volatility (percentage variation over say, a month) that this stock exhibits? Do you have sufficient faith in this stock that you would be prepared to hold it in the event of a sizeable dip in the stock price?
5. Need : If you don't invest in this stock, will you be likely to feel that you missed out, assuming that investing adds to your diversity in a financial sense and as a person.
6. Skill : Do you feel you possess the necessary skill to invest in this particular stock? Do you have a good enough understanding of the industry in which the stock is positioned in order to be able to make sound decisions based on your financial and personal goals?
7. Simplicity : Sometimes a simple strategy works better than a complicated one. Are you able to step back from difficult situations and remember simple investment principles that are known to work...for example, buy low and sell high.
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