We are usually spoilt for choice when looking at what to invest in, but there are several steps you can take towards making the most of each investment.

Data enables better-informed decisions to be made when buying and selling shares. Typically, this data comes in two sets:

• statistics on prices and volume of trades made in various markets
• direct financial data provided by any given company  

No.2 can be broken down further into various metrics, through which invaluable data can be gleaned about the potential financial performance of a business and, in turn, your shares invested.  

Metrics

Metrics alone cannot tell the full story of a particular stock/company, but they do provide a solid foundation upon which to build a clearer image of potential gains or losses to be made on said company. These include:

• Return on Equity or Profitability Ratio
• Price/Earnings Ratio
• Cash Flow
• Revenue and Profit Growth
• Debt (if the company has any)
• Dividend Yield (if dividends are paid)

These statistics can be found on stock analytics sites or certain ATS platforms but, for a deeper dive into any company’s financial performance, check out its direct data.

Direct Data  

Any listed company will issue annual reports and shareholder emails, providing a ‘snapshot’ of its financial performance at any given time. The only drawback is that such analysis can be overly time consuming and requires pre-existing knowledge of financial statistics to properly assess the data. 

Media and investment monitoring platforms

Investors nowadays have access to a wealth of information regarding companies and stocks performance. News sites, blogs, social media posts and numerous other media can all provide investors with diverse and invaluable insights into making the right choices.  

However, some information gained through news media should be taken with a grain of salt as sources may be biased to a certain opinion or viewpoint.  

There are also other investment monitoring platforms such as Bloomberg, Pitchbook, Morningstar, CB Insights, and KingsCrowd.

Community Sentiment

Public opinion can shape much of a company’s reputation and brand image. Social media, customer reviews and news articles can all be analysed by investors for a clearer picture of how the public regards any company. But be aware also that community sentiment may be skewed by a small yet highly vocal segment of the consumer base.

The advent of crowdfunding has seen high growth private companies build huge private investor communities who are often great advocates and ambassadors for these businesses. Many of these companies have investment platforms on their websites or crowdfunding platforms such as Wefunder, Republic, NetCapital, Seedrs and CrowdCube. There is often an opportunity for investors to ask questions or attend webinars – all can give investors further insight into a company’s trajectory, culture, and accolades.

Individual experience 

Your own knowledge may potentially give you an edge in investing. For example, if you previously worked in a certain technology, you may be able to make more highly informed investment decisions in that sector. Additionally, you may find patterns or trends overlooked by less knowledgeable investors.  

‍Analysing Data 

Collecting data is only the first half of the story when choosing the right investments. Nowadays there is a plethora of digital tools to help you organise and analyse your data, such as Microsoft Excel, Tableau, Trifacta and Qlikview.  

Good analysis can tell the investor about the market and issuer, enabling better decisions based on more accurate data. For example, detailed analysis might show exactly how and why the target company’s market is growing; if it is also a leader in that sector then this will underpin any investment decision.  

Regulation investment options

Following the JOBS Act in the US, which came into effect in 2016, the financial regulators opened up the markets to offer more opportunities, regulatory cover and security to private investors wishing to back high growth private companies. They are as follows:

Regulation CF – crowdfunding up to $5 million per year for private companies, is now open to the ordinary man or woman in the street – retail investors – as well as angel, accredited and institutional investors.

Regulation A+ – this next level allows private companies to raise up to $75 million a year without having to list on a public stock exchange, but enables retail investors as well as angel, accredited and institutional investors to participate in the scale up and high growth stages of these companies.

Regulation D – can be used by private companies or entrepreneurs to obtain funding faster and at a less cost compared with a public offering. In practice, it is usually used by smaller companies preferring not to ‘go public’ and allows capital to be raised through the sale of equity or debt securities without needing to register those securities with the SEC.

IMPORTANT NOTICE

Investors should recognise and accept the risks associated with investing.

Certain investments may require you to keep your holding for periods of many years with limited or no ability to resell unless there is a strongly regulated secondary market.

You may also have limited access to periodic reporting, see your holdings decrease and increase in value, or even lose your entire investment.

Investors should decide for themselves whether to make any investment, basing this on their own independent evaluation after consulting with financial, tax and investment advisors.

The Knowledge Hub does not constitute financial advice whatsoever, but rather provides basic general industry information.