Last week I mentioned about the importance of reading the analyst reports, however, just sitting down with a pile of financial statements isn't a very efficient or effective way of determining whether or not a company is a good investment decision. You've got to organize your thoughts - otherwise you're just going to be spinning your wheels. That's why creating your own investment analysis form can be one of the most valuable investment tools in your arsenal. An investment analysis form is a tool that you can use to help gather numbers and essential information needed to make an investment decision in one easy-to-use format.
An investment analysis form allows you to better interpret your data systematically, as all of the information is collected into a standardized format. Because information is plugged in uniformly, you're guaranteed not to miss anything that you have deemed important.
Moreover, an investment analysis form also allows an investor to simplify his or her research by only looking at information that is relevant to the investment decision.
The first step of creating an analysis form is to decide what you want to include in it. For example, you may want to include the PRINCED rule as your stock investment criteria, together with the 52-wk high/low, and some technical indicators information.
Once you're all set up with a form of your own, you'll probably find that collecting your thoughts is a lot easier than it used to be. It just simplifies the process of investment analysis.
What I like about the investment analysis form is that when you're trying to browse through the various companies in the analyst reports, your mind stays active while you jot down the key figures. This helps you to analyse your investment better. Just don't forget that an investment analysis form is just an aide. It won't tell you whether a particular stock is a smart investment, but it can help you organize your thoughts and data so that you can make an informed decision yourself based on facts and figures.