Chapter 12

Putting Companies Under the Microscope


Bullet Picking apart companies’ financial statements

Bullet Unearthing overlooked details about companies

Bullet Uncovering details about a company’s financial condition

Bullet Researching the people running a company

If you’re the kind of online investor looking to buy the next home-run stock such as Facebook, this chapter offers tips that might help you. I show you how to use online tools to unearth details about companies that aren’t picked up by general investing websites. I explain how you can glean insights about companies by dissecting financial statements, and I show you how to compare companies with their peers.

Just be careful. Consistently choosing winning stocks and buying and selling them at the right times are infamously difficult and time consuming. If you don’t know what you’re doing, you might make less money picking individual stocks over the long term than you would if you just bought a mutual fund or exchange-traded fund (ETF) that keeps up with the market.

Understanding Financial Statements

Most investors focus on companies’ ...

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