The Importance and Value of Research

October 30, 2006 | By | Reply More

Lets face it each and every one of is confronted by some aspect or other of investing time in research every day of our active lives.

Whether it is looking up a recipe to give the old man and the kids something different for dinner and costing the ingredients, deciding on a family holiday, choosing a mutual fund to tuck a little cash into for a rainy day, the best auto insurance deal, and even choosing clothes out of the closet each morning for every day wear, for the kids, for the light of your life, for a special occasion, to go shopping in, what to buy at the supermarket, to go to work in, to be fashionable, where to go for a meal, that every day list is endless.


Analyzing Research

Look at and analyze two of the most successful men in today’s business world.

Do you think that Bill Gates got where he is now without researching his market and his competition and using his research results to spot future trends that put Microsoft and its innovative products ahead of the game and has kept it the market leader.

His decisions could only have been decided by his evaluation of the results of comprehensive targeted research that gave him the edge over others who expected to compete with his company for that top spot.

Another of the world’s richest men, Warren Buffett, has made his fortune and those of many others who have followed his advice, purely by researching listed companies, commodities and currencies in depth and that conform to the parameters that he has developed over his many years of experience in the financial markets.

Mr Buffetts’ bottom line is whether an investment will become profitable and the answer to that question is simply his ability to spot trends by analyzing research. The result has been lots of money for Mr Buffett, his associates and his investors.

There are many men and women who have become very wealthy by researching the wants of the man or women in the street.

My favorite is Martha Stewart, who, despite her gaol sentence, made a fortune by knowing what Mrs Average American Woman wanted and needed to fulfill her role.

She may have started by instinct but her success was built and sustained by ongoing research (and hard work), pity she got greedy but she has bounced back. She knows her market by constant research and maybe a bit of gut feeling thrown in.

Lessons to take on board

What are the lessons that we must take on board? To be successful in our entrepreneurial activities as investors or market speculators, it is not only necessary to research in depth our chosen subjects for prospective profitable opportunities but to also have the ability to evaluate the results to give us the parameters we will need to combine optimum profitability within a calculated time frame and minimize the downside chances of taking a loss.

This is the path to providing the income that we want, expect or need to achieve.

This summation needs thinking through, it is not simply research. It is essential to make sure that the research that we undertake is targeted and comprehensive and that we have a clear understanding of the objectives and pathways to profitability that link us in with the ultimate goal of minimizing the risk and making money from each and every financial decision we expect to profit from.

To do the business, know what you want to achieve, work at it today and every day, be determined to succeed, no short cuts on research, plan, be patient and not faint hearted, and when you do identify a developing trend and, who knows, you might amongst the first to get in on the ground floor, play it hard for all its worth.

Remember trends are, more often than not, cyclical, so keep researching keeping an eye open for the next trend and be prepared to dump that once great earner as it becomes exhausted and move on to the next opportunity.

To achieve the ultimate goal of financial independence think positive, learn from your mentors, think outside the box, conduct your research in depth and to specific parameters that you, and only you, believe will give you that all important edge that will maximize the ongoing profitability of your investment portfolio.

Finally a tip that I always use in timing when to get in or out of a speculative play and that also works well for longer term investment strategies.

Familiarize yourself with the basics of technical analysis, pay particular attention to the fundamentals of moving averages as they can give good timing signals relevant not only to the stock market but also to commodity and forex trading.

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Category: Investment Research

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