Investing in a business leads to a different kind of risk. For example, facing currency risk is likely when you invest abroad. In other words, the value of your investment may change substantially because of changes in the foreign exchange market. Other risks include liquidity, credit, and inflation risk. Investment research helps you avoid these risks because it gives you an adequate level of information on particular markets and businesses. This information would help you make the right decision if you learn from it. Here are 5 tips to learning from investment research.
- Separate Facts from Opinion
Researchers present facts. Your task is to determine the impact of these facts on your current or future investment. Researchers will share their opinion as well. These opinions give you an idea of the likely impact of the facts that they presented to you. Learning from investment research is only possible if you focus on the facts presented to you. They represent the true position of an investment. Opinions are important but they can be inaccurate. Remember, learning about how markets work is impossible if you confuse facts with opinions.
- Recognize Patterns & Trends
Business variables have different relationships. Some of these relationships are causal. Others are a coincidence while a strong correlation exists between a few of them. Learn the difference between causality, correlation, and coincidence. Learning that is possible if you learn to recognize patterns and trends between two or more phenomena. For example, what happens to the money market when the Bank of England increases its base rate? Study these patterns in your research material and you will learn from it.
- Analyze the Limitations
Studying everything there is to know about a particular phenomenon is impossible. Consequently, investment researchers focus on limited areas of a particular issue. For example, some of them will focus on the performance of companies listed in the FTSE 100. Understanding why these researchers are limiting themselves to these companies helps you learn about the importance of the FTSE 100. For example, you can ask yourself why this index is so important. Doing so would help you learn about the stock market, indexes, and financial analysis.
- Apply Findings to Different Situations
The principal aim of investment research is to apply it to different situations. Doing so helps you understand the research from a different perspective. For example, you can learn about a specific stock in a particular article. Then you can use that information to analyze another stock. The same case applies to brick and mortar investments. A housing study in Brixton, London gives you an idea of what is happening to the housing market in Southwark, London.
- Discuss Them Online and Offline
Online and offline discussions are critical for learning from investment research. For instance, discussing what you read heightens your interest in the issue under discussion. Consequently, you research more on it than you would on any other topic. Additionally, discussing the research encourages you to read the research carefully and analytically. You will analyze each word making sure that you got it right and then you will discuss the issue exhaustively with your colleagues in the office or online.