In my last article I have mentioned that the money itself does not make you rich. You can win or inherit millions or even billions of dollars but if you do not know the way of how to handle it, how to invest it than either you can turn to a financial institution for help or you do it by yourself. But do not do it on your own if you do not have previously obtained strong financial education.

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What makes you rich is not the money! It is your strong Financial IQ, your well developed business skills (how to read and interpret a financial statement, how to sell, how to promote a product, etc) which will make you rich. Many people would like achieve great success by investing their saved money on the Stock Exchange. Despite, most people tries to achieve success from advices, tips, recommendations of others. I do not have the intention and the right to insult anybody, but what I would like to say is:

You invest your money! Not your the money of your friend or your money of your broker. You have to acquire those skills and knowledge, by which you can become successful stock exchange investor!!

Since I thought of writing in this article about stock exchange investment. I would like to come up with some hints, advice, orientation for those who plan to invest their money into stocks. Once again, you must invest time, effort and last but not least energy into your self-education. Attend to investment seminars, learn how to read a financial statement, learn the basics between fundamental analysis and technological analysis. Learn how to gain information by using financial ratios, indicators.

But if have your money in your hand, do not rush into the nearest brokerage and say the broker “Sir, I have x dollars to invest into stock! Tell me which to buy!

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Let’s say that you read weekly, monthly some financial magazines(Forbes, Money, Entrepreneur, Wall Street Journal) in which stocks of some companies are suggested for purchase. There can be couple of reasons why these stocks are suggested for purchase: the company has huge possibility for a rapid and dynamic growth or comes up with new products or the stock is strongly undervalued.

What you should do first is to do a research about that industry in which the company operates. Whether the industry stagnates, or grows steadily or rapidly. How many competitors the company has and what market share they have. How the industry achieved in the last five years? You pay close attention and try to understand to the best of your knowledge those economic indicators, which provide information about the possible future of the industry.

I did not start the process of analysis with the Macroeconomic Indicators. The reason is: You have to take into consideration the Macroeconomic indicators whether you analyze the industry or the company. For example the current macroeconomic trend in consumer market: the US consumers cut back their spending, thinking at least twice what they spend on. You have to assume the possible effect on sales volume retailers, producers. If the company produces products, which are purchased on regular basis daily or weekly and needed for the every day life than the possibility of huge drop in the sales volume of the company is theoretically smaller. For example gas prices. It is not price-flexible.

When you start analyzing the company, you must rely on the methods of fundamental analysis versus technical analysis. When you analyzed the company’ financial statement, income statement by using many financial ratios, and basics of value investment than you take close look how the stock of the company moved in the past 5 years. In what price range the stock of the company was in the last 12 months or even 18 months.

Than you set up your theory about the company. According to your research what is the possible future of the company whether it can achieve success or based on its financial indicators it is in difficulties.

And than you turn for the opinion or suggestion of your broker or financial advisor checking how close your point of view to theirs about the current and possible future situation of the company.

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