1. Know Yourself
Every individual and institutional investor is different. This matters a lot in terms of needs and objectives and constraints of the investor, in finance, it’s called an Investment Policy statement (IPS). The IPS is more or less a guide on the whole investment process.
2. Know the Economy and the Industry
Know the economic performance and potential of the country you wish to invest in; be it Tanzania or Taiwan; you have to have some knowledge of the economy you wish to invest in because it has a very huge impact on the profitability of companies therefore stock’s price. You should also have some information on the economy, capital markets e.g. if you wanted some investment information about investing in Kenya, you can start by visiting my blog Invest in Kenya
The Industry is also important; is it a new or old, untapped or over saturated, regulated or unregulated?, that kind of stuff.
The Industry is also important; is it a new or old, untapped or over saturated, regulated or unregulated?, that kind of stuff.
3. The Company’s Corporate Governance
This may sound obvious but many people seem to neglect to research on how the company is governed which has a strong correlation with its long-term stability and profitability. This entails researching on the background of the board members, their other directorships that may raise a conflict of interest, their professional background and what value they are adding to the board of the respective company.
This may sound obvious but many people seem to neglect to research on how the company is governed which has a strong correlation with its long-term stability and profitability. This entails researching on the background of the board members, their other directorships that may raise a conflict of interest, their professional background and what value they are adding to the board of the respective company.
4. The Company’s Management
First of all, it is important for companies to separate ownership from management such that those who own the business are not necessarily running the stressful day-to-day hustle. The management of the company should also be appointed on merit and not based on family ties, tribe, religion or any other insane reason other than they are the best people for the jobs.
5. Strategic Human Resource Management
Over the last two decades, empirical studies have been done by top academicians and have proven that strategic human resource management best practices have indeed improved the whole organizational performance, boosted productivity, improved employee commitment and decreased labour turnover and absenteeism. All of these benefits will most likely trickle down to the balance sheet and Profit and loss statement and therefore the stock price.
Over the last two decades, empirical studies have been done by top academicians and have proven that strategic human resource management best practices have indeed improved the whole organizational performance, boosted productivity, improved employee commitment and decreased labour turnover and absenteeism. All of these benefits will most likely trickle down to the balance sheet and Profit and loss statement and therefore the stock price.
6. Women
To make things clear, I am a man. Now, there are many studies that show a strong correlation between having women in the leadership and management and it’s the firm’s profitability. Cranfield University Researchers in England proved a consistent and increasingly high correlation between high market value and the presence of women directors on the boardrooms of for-profit companies. More studies here
In fact, the Government of the United Kingdom has made law that every company listed on the FTSE must report on the number of female directors in each and every board.
To make things clear, I am a man. Now, there are many studies that show a strong correlation between having women in the leadership and management and it’s the firm’s profitability. Cranfield University Researchers in England proved a consistent and increasingly high correlation between high market value and the presence of women directors on the boardrooms of for-profit companies. More studies here
In fact, the Government of the United Kingdom has made law that every company listed on the FTSE must report on the number of female directors in each and every board.
7. Financial Statement Analysis
Nobody likes the numbers and financial jargon found in financial statements but it is inevitable for you to go through the financial statements of a company before even thinking of buying the shares. It sounds simple but many analysts take the FSA lightly even the pros in wall street e.g. Enron together with their accounting firm, Arthur Anderson clearly doctored their books with their complex business model, absurd revenue recognition, mark-to-market accounting, special purpose entities etc Behind the scene they were siphoning funds from investors’ profits and any serious analyst could have noticed the discrepancies in financial statements but not many were that serious.
8. You are Down with the OPP (Other Peoples Opinion)
In Wall Street lingo, it’s called following the Smart Money; these are the guru investor stock pick and they really do matter because they have experience in stock picking and whenever a guru picks a stock, traders quickly buy into it forcing an immediate spike in share price. In Kenya my best smart money guru is Aly Khan Satchu of Rich Management who normally shares information on his site and world major TV networks like CNBC and Aljazeera.
In Wall Street lingo, it’s called following the Smart Money; these are the guru investor stock pick and they really do matter because they have experience in stock picking and whenever a guru picks a stock, traders quickly buy into it forcing an immediate spike in share price. In Kenya my best smart money guru is Aly Khan Satchu of Rich Management who normally shares information on his site and world major TV networks like CNBC and Aljazeera.
9. Read The Intelligent Investor
Before buying an investment, I would advise you to read this classic book on investments and how to approach the art of investing. Many people wish to invest but do not necessarily invest in learning to invest and end up burning their fingers in the stock market. The best thing about this book is that it the author mentored Warren E. Buffet into the most successful investor on the planet and 3rd richest man now according to Forbes, so do you need another reason why you should read The Intelligent Investor?
10. Patience
As easy as it may sound, being patient in the investment world is inevitable. It takes time to build strong and successful companies and
As easy as it may sound, being patient in the investment world is inevitable. It takes time to build strong and successful companies and