Buy Firms with Financial History

You should only purchase investments you can actually research and analyze. This eliminates investments that you either cannot analyze or investments that have no publicly available financial history for research. In many cases, this eliminates initial public offerings and private companies that cannot or will not provide you with financial statement information. The very obvious reason for avoiding closed history firms is that you simply don’t know what you are purchasing.

The chances of you earning profit consistently while purchasing firms that cannot display a reliable history are slim. During an IPO, you can sometimes acquire a firm’s reliable financial history. The problem is, due to the private ownership, you may not always be able to judge a firm’s finance statements. An additional problem with IPO’s is they are rarely worth purchasing initially.

There is a queue to purchase IPOs, and as usual, individual investors are last. Institutional banks and institutional investors go first, and the best deals are quickly seized. Deals that do trickle down to individual investors usually are overpriced. Often, they rise in value then immediately tank thereafter. You should avoid issued shares until emotions surrounding IPO’s subside. You should avoid shares which have no publicly issued financial statements. If you cannot analyze or judge value, you can’t make proper investment decisions.