Although the Financial statements is a one way to assess and evaluate the company's performance and the success of one company. Reading the printed financial records about a company is never enough to justify an investment. One of the major steps in prudent investment must be to find out about a company's affairs from those who have some direct familiarity with them.
The next logical step in this type of reasoning: it is also necessary to learn as much as possible about the people who are running the a company under investment considerations.
A worthwhile conclusion as to whether the particular company has outstanding potentialities for growth and development should be based on the examination of each subdivision of a company's organization and by detail of the executive personnel, its production, its sales, and each of its major function. In case of really outstanding company, all of these informations are so crystal clear that even a moderately experienced investor who knows what he is seeking will be able to tell which companies are likely to be enough interest to him to take further investment decision.
Other major question that confronts every investor that are entrapped by the lure of market is whether to invest on the stocks that "are still cheap" and are worthwhile because "they had not gone up yet"'. Is it wise to invest among stocks which are still undervalued in the market?
While a stock could be attractive when it have a low price earning ratio, a low price earning ratio by itself guaranteed nothing and is apt to be a warning indicator of the degree of weakness in the company.
What really counts in determining whether a stock is cheap or overpriced is not its ratio to the current year's earnings, but its ratio to the earning a few years ahead. If someone could built up in himself the ability to determine what those earning might be in a few years from now. He would have unlocked the key both to avoid losses and to making magnificient profits.
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