If you’re the kind of investor who has a lot of other things to do, you have to know how the busier investors track the market.
Interest Rate and Commodity Trends
For busy investors, it’s quite impossible to track the market events on a daily basis. However, some amount of daily checks is necessary to keep abreast of what’s happening in the market.
Two big areas you can focus on are interest rates and commodity costs.
Higher interest rates usually mean lower stock prices. In general, companies dish out more money on loan payments. This in turn decreases their earnings, which translate to lower stock prices.
On the other hand, lower interest rates can mean that individuals and companies spend less on interest payments. Therefore, their bottom lines will increase and the higher earnings usually mean better stock prices.
Checking Broader Market Trends
You don’t have to glue yourself on the TV or the internet. But you should at least know the biggest events that are happening on the financial markets. It’s usually wise to watch financial media programs at least once a week.
Make sure that you know which industries are currently under pressure or out of favor, and which industries are booming.
Geopolitical events are also very crucial factors that affect what you hold in your portfolio. Apart from that, you should also know the latest news on taxes and currency rates.
Investors who buy individual stocks usually employ this method, where they review the company’s Management Discussion & Analysis (MD&A) on its financial statements.
Investors do this quarterly, and they ask themselves several questions as they go through the company’s financial statements.
Is the company optimistic when talking about its future? Did it make any good insights regarding the current state of affairs? What future developments is the company planning that may affect its profit and future growth?
These are features of interest that will help you make a well-informed decision when it comes to your investment. The good thing is that companies usually issue their earnings report and financial statements only once every quarter, so you don’t have to do this a lot in a year.
Interviews and Meetings
For investors who are even busier than the busiest ones, quarterly checking of financial instruments may still be a bit of a task. The next choice they have is to set up appointments to interview someone who has knowledge of such matters.
Find a time when the professional may be free to sit down and talk to you. Once you have them, ask everything you want to know about the company. They may be able to offer some valuable insights you haven’t uncovered using your own research.
Some of the most important questions to ask include their opinions on where the company is heading, what the biggest risks are for the company’s future, and whether they think the company’s stock is under- or overvalued.