Questions to Ask Before Investing in a Company
When I'm at parties a lot of time talking to someone who is in investments, and they start talking about this investment they are making in this company, I always ask them the same question: How strong is that company's balance sheet? And just wait for an answer, and usually there's no answer. And I'll follow up with what's the company's IBIDA, and what is the value of their equity, and how is the cash flow of the company looking, what is management? And they will usually not have answers to any of these questions because they never actually took the time to go online and look at the company's information.
And this company, public companies have to give you quarterly financial statements, audited financial statements, every time they do a transaction it has to be reported, and all of this is reported on sec.gov. And what I tell people is listen, if you're going to make an investment, or you're going to buy a little company, or you're thinking of getting a job in an industry, find what companies are in there and go on this website and see what these public companies are making, what they're doing, how management feels about competition, especially if you're going to be doing an investment. A lot of people will just buy an investment for $10,000 and say, "Well, I like this company or I like that company." Well, did you take a look at the company? Did you take a look at the cash flow? Did it make sense? They don't want to do that, they just like the product.
Years ago a famous investor, Peter Lynch, he said that how he finds his companies is by going to the mall and looking for products that he likes and he buys it. So that's what a lot of people do, they go and they find a product they like and they buy it. But what Peter Lynch also said is that once he finds a company he likes he does the research. Hours and hours of research. He goes on the security websites, sees how the cash flow of the company is. You need to do both.
So, what I'm trying to tell you is, if you have any questions about any industry, or buying a company, or making an investment, you can go on and get this stuff for free at security.gov. Everything is there about that company that you can imagine and more.
If you have any questions about this video feel free to give me an email.