The Value of Research in Stock Investment


There is a very basic reason why research is a must in stock investment. What you have to understand is that stock investment always has a medium to long term horizon. Those who want to make quick short terms gains on the bourses engage in stock trading,not investment. So it follows that if you are going to commit your hard earned money to investing in a stock that will provide you the desired returns only years down the line, you have got to be sure that you are doing the right thing.
This is where research comes in. The three important markers for carrying out this kind of research are identifying promising businesses, picking the stocks with the right valuations and the ability to have long term focus. You can imagine that it is going to be very difficult for a novice investor to have that kind of understanding and insight into the workings of the stock market. It takes years and years of experience to obtain that kind of expertise.
What one can do is to seek the advice of experts and certified research analysts who possess the wherewithal to make sense of the bewilderingly complex world of stock investment. At 10 for example we have acquired expertise in small cap investment over the years, in the process earning us a designation of a SEBI registered research analyst. We provide bi weekly advice about two small cap stocks to invest in.
We arrive at the recommendation on the basis of extensive research into the viability of stocks, as well as our intimate understanding of the myriad scenarios that can possibly unfold on the bourses in the coming years. What we never do is encourage mindless speculation. We understand that the stock market is put to best use as a platform for investing in organized business and growing one’s wealth. This occurs when the businesses we help fund are able to grow and generate wealth in the process growing both national and individual wealth.
The success of this form of investment lies in judicious choice of stocks to invest in, which can only be obtained by research. Research based investment enables people who would otherwise never think of engaging in business themselves become part owners in successful businesses.  This is investment in the true sense and far removed from the reckless short term trading that stock investment is often confused with.
The advantage of investing in stocks is that if backed by high quality research, it can offer very competitive returns when compared with things like bank accounts, debt instruments, post office deposits and public profit funds. While in no way suggesting that one invest solely in stocks and not diversify across asset classes, the fact of the matter is that research based stock investment can offer you excellent returns.

So the next time you hear a horror story about somebody losing their all by investing in the stock market, you can be sure of two things- that the person in question must be a stock trader and not investor and the second that no research went into the decision to buy the stocks in question. Research based stock investment is the only safe way of stock investment.